Magazine article Nation's Cities Weekly

House Okays Tax Breaks for Small Business to Smooth Wage Hike

Magazine article Nation's Cities Weekly

House Okays Tax Breaks for Small Business to Smooth Wage Hike

Article excerpt

The House easily passed and sent to the Senate legislation to provide some $7 billion in small business tax breaks and a number of NLC-supported proposals to modify municipal retirement programs. This happened after the leadership separated the small business tax break package from a proposed increase in the minimum wage. The leadership initially had proposed the tax relief package to soften the perceived blow to small businesses of a minimum wage increase.

The White House has indicated the administration could support the package. while expressing concerns about the possibility of the Senate making the bill into a "Christmas tree" of tax breaks. Senate leaders had been awaiting House action to determine how to break the logjam on the Senate floor involving not just the minimum wage, but also the proposal by Senate Majority Leader Robert Dole (Kans.) to auction off spectrum to pay for the temporarily repeal of the 4.3 cent per gallon federal gas tax (See related story).

The bill, the Small Business Job Protection Act, HR 3448, would provide new small business tax breaks, an extension and redefinition of the expired exclusion for employer-provided education assistance and targeted jobs tax credits, and proposals to eliminate some of the restrictions on state and local retirement programs.

With House GOP leaders and small business allies conceding they were powerless to prevent a bipartisan majority from adopting an increase in the minimum wage, the tax package is an effort to mitigate the impact of such an increase on small businesses. The main provision in the bill would permit small businesses to deduct as much as $25,000 a year in the costs of new equipment, an expansion which would increase the federal deficit by $3.6 billion.

The bill would also:

* extend, retroactive to January 1, 1995, the exclusion for employer-provided educational assistance, but restrict it to undergraduate assistance after January 1, 1996. …

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