Small Businesses Hope for Tax Relief, Worry about the Minimum Wage

Article excerpt

Now that the U.S. House has passed its version of a small- business tax relief bill, business owners are waiting to see if the tax cuts become reality -- or if they are nullified by an increase in the minimum wage.

Both houses of Congress have passed separate tax relief and minimum wage bills. Over the next weeks or months they will have to reconcile their differences and come up with uniform legislation to be approved by the House and Senate and signed by President Clinton. But Clinton has warned he will veto a bill that gives too many tax breaks.

Some small business advocates aren't optimistic about the bill becoming law.

"I think we're standing on jello," said Christopher Wysocki, president of the Small Business Survival Committee, a Washington- based advocacy group. "Clinton has made it clear from his perspective that he'll veto anything that contains substantial tax reductions for small businesses."

The Clinton administration maintains that the bills provide more tax relief for the wealthy than they do small businesses. At a White House briefing last week, Press Secretary Joe Lockhart said, "Nobody in the real world believes this bill, as written, has really anything to do with small business."

But if a tax relief bill does become law, Wysocki said small businesses in many parts of the country fear they won't be able to afford the $1-an-hour minimum wage increase that has been paired with the tax cuts.

"From a small business perspective, the tax bill is great... but it's married to an increase in the minimum wage, and what does that do to the guy who runs a small bakery in Tuskegee, Ala.?" Wysocki said. "In the high-wage states like California or New York, the minimum wage is not going to impact those people in the same way it will in the rural areas."

Moreover, he said, "If we raise the minimum wage by $1 over two years, what impact does that have on inflation? If we want to achieve an economic slowdown or a recession, the minimum wage is good way to go about it."

Susan Eckerly, chief Senate lobbyist with the National Federation of Independent Business, said, "We feel very strongly that these (tax relief) provisions are necessary to offset the costs" of a minimum wage increase. …