On February 15, the House approved, 360-45, the Small Business Tax Relief Act of 2007 (H.R. 976). The House Ways and Means Committee approved the bill by voice vote on February 12, after adopting, also by voice vote, a substitute amendment by Chair Charles Rangel (D-NY). The tax credits contained in the bill are expected to increase the likelihood that the House and Senate will agree to legislation raising the minimum wage from $5.15 to $7.25 per hour over the next two years. The House approved a bill to increase the minimum wage without any tax provisions on January 10 (see The Source, 1/12/07). The Senate approved the bill on February 1, after adopting a substitute amendment that included tax credits for small business and a five-year extension of the Work Opportunity Tax Credit (WOTC) (see The Source, 2/2/07).
The House bill would extend the WOTC through 2008, rather than through 2012, the date included in the Senate version. The House bill also would: raise the limit on small business expenses from $112,000 to $125,000, starting in 2007; allow a business that is jointly owned by a married couple to file as a sole proprietorship; and deny the lowest capital gains tax rate to the dependent children of those in the highest income tax bracket.
In a press release, Chair Rangel said, “This bill strengthens opportunities for small businesses and serves as a symbol of what can happen when Democrats and Republicans work together. This tax relief will help small businesses continue to grow and hire new workers to keep our economy strong. This is a bipartisan bill providing critical momentum for the bipartisan efforts to raise the minimum wage.”
“I believe it is important to couple a minimum wage increase with tax cuts to help businesses that will be hurt by higher costs,” said Ranking Member Jim McCrery (R-LA) in a press release. He continued, “This bill will provide nearly $2 billion in tax relief, and unlike the Senate bill, much of that relief will be immediate helping businesses when costs are rising, not just down the line. I look forward to working with Chairman Rangel and our colleagues in the Senate as we try to get a minimum wage bill with sensible tax relief signed into law.”