Senate Passes Minimum Wage Hike - With Tax Breaks for Business

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The Senate voted 94-3 yesterday to raise the minimum wage by $2.10 over two years. Unlike the minimum wage hike passed by the House of Representatives a couple of weeks ago, the Senate bill also includes a package of tax breaks and other offestting provisions to replace the revenue.

Polls indicate that at least 80 percent of Americans 'including majorities of Democrats, Republicans and Independents" want to see the minimum wage increased. One poll even shows that three out of four small business owners think a minimum wage increase will have no effect on them. Yet President Bush and his Republican allies in Congress have come to the strange conclusion that in order to pass both chambers of Congress, any bill increasing the minimum wage must include new tax breaks for business in order to compensate companies for the alleged damage it will cause them. As Jared Bernstein and Lawrence Mishel explain in the American Prospect, the idea that business needs to be compensated because Congress is raising the minimum wage from its lowest inflation-adjusted level in 50 years is nonsensical.

Republican Senators Hold Minimum Wage Increase Hostage to Tax Breaks for Business

During the previous week, Senate Democrats could not convince enough Republicans to join them to end debate on a "clean" minimum wage increase, meaning a minimum wage hike with no tax breaks or other provisions attached to it. Only five Republicans joined all of the Democrats present for a total of 54 votes - fewer than the 60 votes needed in the Senate to close off debate and move on to approve the legislation. House Democrats had hoped the Senate would approve the bill, H.R. 2, which was a key part of the "First Hundred Hours Agenda."

On the other hand, some Republicans and business lobbyists complain that the tax cut package doesn't do enough for business since a large part of the tax breaks go to hiring welfare recipients, newly disabled veterans and individuals from other at-risk groups, rather than other tax breaks that businesses find more beneficial to their bottom line. They have also complained because the offsets are "tax increases" on business, in their thinking.

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