House Passes Small-Business Tax Cuts, Making Minimum-Wage Increase Likely

The bill is part of ongoing negotiations between the House and Senate over the first wage increase in a decade.

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In a move that brought a federal minimum-wage increase closer to reality, the House on Friday approved $1.8 billion in tax cuts for small businesses aimed at boosting bipartisan support for the hike.

The tax cuts, which passed by 360-45 on Friday, included permanent extensions to tax write-offs for small business that were set to expire, along with credits for hiring disadvantaged workers and other benefits. 

The bipartisan measure is part of ongoing negotiations between the House and Senate over a bill that seeks to raise the federal minimum wage from $5.15 to $7.25 over two years -- the first increase in 10 years.

About two million workers nationwide are paid the federal minimum wage or less, according to the Labor Department.

In January, the House passed a bill that raises the minimum wage without tax cuts for small businesses, which some lawmakers and business advocacy groups say will be hit hardest by higher labor costs. The Senate version of the bill, approved weeks later, includes more than $8 billion in tax relief for smaller employers. 

President Bush has said he will only support a wage hike balanced by tax relief.

Rep. Charles Rangel (D-N.Y.), who co-sponsored the bill approved Friday with Rep. Jim McCrery (R-La.), said the tax-relief efforts demonstrate that Congress is capable of acting in a bipartisan way on the issue of raising the minimum wage.

"The cooperation between Republicans and Democrats that made this bill possible should set the tone for the rest of the Congress as we search for common ground and solutions to tough issues," Rangel, the chairman of the House Ways and Means Committee, said in a statement last week.

"Going forward, the amount of tax relief in this bill should serve as a floor, not a ceiling, in our negotiations with the Senate," McCrery, the ranking minority member on the committee said in a statement.

A compromise minimum-wage bill is expected within the next few weeks.