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Wednesday, January 24, 2007

US Senate Rejects Minimum Wage Increase

From the NY Times

January 24, 2007
Senate Rejects Minimum Wage Bill
WASHINGTON, Jan. 24 -- Prospects for an increase in the minimum wage suffered a setback today in the Senate, where a majority rejected a move to raise the minimum by $2.10 an hour without tax breaks for small businesses.

By a vote of 54 to 43, the chamber rejected an effort to pass a bill that would increase the wage to $7.25 from the current $5.15 in three steps, but without tax breaks. The measure was overwhelmingly approved by the House two weeks ago.

The vote came on a motion to shut off debate and go to a “yes or no” vote on the measure itself. Since 60 votes were needed to end debate, supporters of the House-approved bill lost by 17 votes.

Today’s vote, while disappointing to those who want to raise the minimum wage at once and with no accompanying tax provisions, was hardly a surprise. A substantial number of senators had indicated they wanted to tie a wage increase to tax breaks for small businesses, to help offset the costs of the increase.

Next, the Senate will debate what kind of tax breaks to attach to a wage increase. Then, the Senate will have to agree with the House. President Bush has signaled that he would sign a bill providing for a wage increase with related tax breaks.

All 43 “no” votes on the motion to end debate were cast by Republicans. Five Republicans joined 47 Democrats and two independents in voting “yes.” They were Norm Coleman of Minnesota, Arlen Specter of Pennsylvania, John W. Warner of Virginia and Olympia Snowe and Susan Collins, both of Maine. (Senator Sam Brownback, Republican of Kansas, and Senators Tom Carper of Delaware and Tim Johnson of South Dakota, both Democrats, did not vote.)

Good for Senator Coleman for supporting an increase.

I'll be interested to see what sort of tax breaks are proposed.

An employee's gross pay IS a deductible business expense, so doesn't a business automatically get a bigger tax deduction by increasing employee wages?

For non-profit employers (e.g. some nursing homes), a tax break means nothing.