Congress on Thursday approved a bill that will increase earnings for minimum wage workers from $5.15 to $7.25 an hour over the next two years, the Washington Post reports. It is the first increase in the federal minimum wage in nearly a decade.
A spokesman for President Bush said he would sign the bill, according to the newspaper.
The wage hike was attached to an emergency spending bill for the Iraq war. It came with $4.8 billion in corresponding business tax breaks.
Democrats contend the measures approved yesterday will lift the incomes of about 13 million workers—5.6 million who earn less than $7.25 an hour and 7.4 million people who earn slightly more but are likely to see their wages increase, the newspaper reports. Workers would get their first raise, to $5.85 an hour, 60 days after the measure is signed by Bush. A year later, the minimum wage would rise to $6.55 an hour, and it would hit $7.25 a year after that.
Republican leaders, backed by small-business lobbyists and restaurant groups, argued that raising the minimum wage would cripple the economy unless accompanied by significant tax cuts for small businesses, the newspaper reports.
Those concerns delayed passage of the wage hike for months.
The two chambers struck a compromise last month that includes tax breaks worth $4.8 billion over 10 years, more than the House wanted but much less than the Senate had sought, the newspaper reports. More than half that amount—nearly $2.6 billion—would pay for an extension and expansion of a tax-credit program for employers who hire former welfare recipients, at-risk youths, and other targeted groups.
The measure would also extend a law that allows small business to quickly deduct $112,000 for equipment purchases and raise the deduction amount to $125,000. It would allow married couples who operate unincorporated businesses to file as sole proprietorships, simplifying their tax returns, and offer tax incentives for rebuilding areas of the Gulf Coast damaged by Hurricane Katrina.
To pay for those provisions, the legislation would raise about $4.4 billion in new revenue over 10 years, mainly through stepped-up enforcement and collection of overdue income taxes. The measure also would close a loophole that permits wealthy taxpayers to shelter income by shifting it to their children.Follow JCK on Instagram: @jckmagazine
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