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House to vote on tax cut to go with wage hike

/ Source: The Associated Press

House Democrats plan to vote next week on a package of small-business tax breaks that could ease the way for final congressional action on legislation to raise the minimum wage.

The House Ways and Means Committee was expected to act as early as Monday on a tax package worth about $1 billion to $1.5 billion - a fraction of the tax cuts that the Senate included in its minimum wage bill.

The decision by Ways and Means Chairman Charles Rangel, D-N.Y., to move ahead with legislation removes one obstacle that had been in the way of a wage hike and sets the stage for negotiations with the Senate.

The House and Senate have passed legislation raising the minimum wage from $5.15 to $7.25 an hour over two years. The House bill contained no tax relief measures; the Senate added tax breaks worth $8.3 billion over 10 years.

Rangel has said the $8.3 billion Senate number is unacceptable. Rangel has been working with Rep. James McCrery, R-La., the Ways and Means ranking Republican, in devising a small-business tax cut.

Negotiations anticipated
Until this week, House Democratic leaders had publicly insisted that Congress pass a "clean bill" - one without any added provisions.

A main feature of the Ways and Means proposal is expected to be a tax credit for businesses that hire disadvantaged workers, including wounded veterans and the poor. That tax credit is in the Senate legislation and costs about $1.8 billion over five years.

"I'm pleased that Chairman Rangel is moving forward in the House," said Sen. Max Baucus, D-Mont., the chairman of the Senate's tax-writing Finance Committee. "The Senate-passed package is larger, of course, than what he's proposing, so we'll still have to work that out between the two chambers."

The House and Senate would have to resolve their differences in a conference committee.

Rangel on Tuesday said he would want to know, going into the conference, what the final tax package would look like.

"There's no way I can go into conference unless I have some understanding of how I'm going to come out in the conference," he said.