End to P.R. Tax Credits Opening Way to New Minimum Wage
Conlan, Michael F, Drug Topics
If Congress passes a minimum wage increase, thank the drug companies. As part of a complicated election-year Kabuki dance, opponents of boosting the $4.25-per-hour wage rate, bowing to the inevitable, have added a legislative sweetener for small businesses. (Also in the mix is a proposed cut of 4.3 cents a gallon in the federal gasoline tax .)
To pay for a proposal to help protect small business, tax credits U.S. firms get for setting up plants in Puerto Rico to stimulate job growth-about 24 of them pharmaceutical companies-would be chopped. The 10-year phaseout of socalled Sec. 936 tax credits would raise about $4.9 billion through 2003, as far ahead as the Joint Committee on Taxation has calculated.
"Any modification of Section 936 must address the impact of the changes on the people, the economy, and the potential for future investment in Puerto Rico," said the Pharmaceutical Research & Manufacturers of America. "PhRMA will continue ... support for Section 936 and urge Congress to carefully and thoroughly examine ... any action which modifies or eliminates this important economic incentive."
The funds from Sec. 936, and about another $1 billion from repealing an interest exclusion for financial institution loans to employee stock ownership plans, would be used to offset the Small Business Job Protection Act. That measure "will help small businesses resist the inevitable job losses that will occur if the minimum wage is increased," said Rep. Bill Archer (R, Texas), chairman of the House Ways & Means Committee.
Archer came up with the bill after President Clinton and Congressional Democrats seized on the minimum wage as a major plus for the fall campaign. The current $4.25 rate was last raised in 1991, and 11 states already require higher payment. Clinton proposed an increase of 90 cents an hour over the next two years for the 3.7 million-plus workers affected. With polls showing a raise had widespread public support, Republican Congressional leaders saw their continued opposition as a political loser and eventual approval as inescapable. …