On January 17, the Senate Finance Committee approved, by voice vote, a bill (as-yet-unnumbered) to extend tax credits for small businesses. The tax credits would be offset by increasing fines and penalties for tax noncompliance and closing loopholes in the tax code related to foreign land transaction and company re-incorporation overseas, and limiting deferred compensation to business executives to $1 million per year. The provisions are expected to be added to a House-approved minimum wage bill (H.R. 2, see The Source, 1/12/07) to raise its chances of Senate passage.
Chair Max Baucus (D-MT) said, “My home state of Montana is a small business state. Small businesses create jobs and spur the economy in Montana and other rural states. Today we can help the rural economy…By acting today we can help create a sounder minimum wage bill. We can help to create a minimum wage bill that can get more than 60 votes and pass the Senate. And we can help to create a minimum wage bill that the president will sign into law…Today let us help small businesses. And let us do the work that Americans sent us here to do.”
Ranking Member Chuck Grassley (R-IA) said, “Let me, first off, thank Chairman Baucus for recognizing the reality of the linkage between the minimum wage and its effects on employers and workers, especially small businesses…The reality is that a minimum wage hike would likely not pass the Senate without small business tax relief. So, to those on his side who have been critical of Chairman Baucus for being practical, I’d ask them how they would propose to get a minimum wage increase across the goal line. It’s one thing to live in political or ideological fantasy land and it’s quite another to make law.”
Included in the bill is a provision that would extend the Work Opportunity Tax Credit (WOTC) for five years. The WOTC, authorized by the Small Business Job Protection Act of 1996 (P.L. 104-188), encourages employers to hire eight targeted groups of job seekers by reducing employers’ federal income tax liability by as much as $2,400 per qualified new worker. The eight targeted groups include Temporary Aid to Needy Families recipients, 18-24 year-old food stamp recipients, disabled veterans, ex-felons hired within a year of release from prison or the date of their conviction, and people receiving Supplemental Social Security income.
