Panel OKs Tax Breaks to Ease Blow of Minimum Wage Hike

WASHINGTON — A $7-billion package of tax breaks for businesses, designed to soften the impact of raising the minimum wage, was approved Tuesday by the House Ways and Means Committee.

The 33-3 vote came after the panel spent five hours defeating a series of Democratic amendments that would have added additional breaks to the bill.

The legislation includes liberalized equipment write-offs for small businesses, a new type of simple pension plan for businesses with 100 or fewer employees and renewal of a $5,250 exemption for employer-paid tuition.

Despite bipartisan agreement on many provisions, the debate grew raucous at times, with Rep. Gerald Kleczka (D-Wis.) yelling that a provision benefiting some restaurant owners would “come back and bite us.”

House GOP leaders plan to bring the bill to the House floor next week. They would then permit moderate Republicans to offer an amendment raising the hourly minimum wage from $4.25 to $5.25 over 15 months.

Even with the tax breaks, many conservative Republicans, including Ways and Means Chairman Bill Archer (R-Texas) say they’ll vote against a minimum wage increase, contending it will destroy some entry-level jobs.

Although the Clinton administration supports some of the main provisions in the bill, Assistant Treasury Secretary Leslie Samuels said they should be considered separately from the minimum wage.

The bulk of the tax package, which would cost $7 billion through 2003, would be paid for by phasing out, over 10 years, a long-standing tax break for manufacturing companies with plants in Puerto Rico and other U.S. territories.

The bill would also end a tax break for loans to employee stock ownership plans and would tax punitive damages received from personal injury lawsuits.

The bill would raise the limit for immediate write-offs of such equipment as computers and furniture from $17,500 last year to $18,500 this year and to $25,000 by 2003.