Minimum Wage and WOTC Pass Next Step (and I Told You So)

On Friday, the House passed an amended version of their minimum wage increase bill including some of the tax breaks that the Senate had tagged on. From ABC News:

The U.S. House of Representatives overwhelmingly approved a $1.8 billion small business tax cut package on Friday aimed at winning passage of a $2.10 increase in the hourly minimum wage.

The 360 to 45 vote in favor of the bill moves lawmakers a step closer to approving the first federal minimum wage increase in a decade, a central campaign issue for Democrats who took control of Congress last month.

The tax cut package is meant to attract Senate Republican and White House support for raising the hourly minimum wage to $7.25 over two years from $5.15. In January, the House voted for the wage increase without the tax cuts. But the closely divided Senate added $8.3 billion in tax cuts to the bill and the two chambers have to work out their differences.

House Ways and Means Committee Chairman Charles Rangel, a New York Democrat, has made clear he believes the Senate measure went too far and noted that the more modest House bill has won some important backing from business groups.

"Not only did we achieve bipartisanship on this bill, but we've received key endorsements from the business community that underscore the strength of this tax relief for small businesses," Rangel said in a statement.

Rep. Jim McCrery of Louisiana, the top Republican on the Ways and Means Committee, said in a statement that the minimum wage increase would cost small businesses more than $16 billion over five years and that he would support more business tax relief. New congressional rules require the tax cuts to be offset and McCrery said he had "serious reservations" about some of the revenue raising provisions in the Senate bill.

In particular, a provision in the Senate bill that would limit deferred compensation plans for corporate executives has drawn criticism from business groups and House members.

The House bill would extend tax breaks to encourage hiring of veterans, the handicapped and high-risk youths through 2008. The bill also would raise the amount of investment in new equipment that small businesses can immediately write off to $125,000 from $112,000 and extend the break through 2010.

The House has changed the Senate's plan for a five year extension of WOTC to no extend just through 2008. As a matter of fact, I think that is exactly what I predicted would happen...