July 26, 2007


Minimum Wage Hike Means Tax Breaks: Congress softened the bite of higher wages with a raft of tax deductions for small biz that take effect this year (John Tozzi, 7/27/07, Business Week)

Workers earning the federal minimum wage enjoyed a boost from $5.15 to $5.85 an hour on July 24, the first of three annual hikes that will bring the rate to $7.25 in 2009. But along with the raise, Congress passed a package of $4.8 billion in tax breaks for small businesses that go into effect this year. While employers in 30 states and the District of Columbia won't be hit directly in the first year of the raise because state laws already mandate wages higher than the new federal rate, those businesses can still take advantage of the new tax breaks.

The biggest boon for most small-business owners is an expanded deduction for new purchases. Any firm making purchases of pretty much anything from livestock to software, real estate excluded, can take advantage of this so-called Section 179 deduction.

Illusory wage hikes and actual tax cuts are the sole Democrat "victory" of this Congress.

Posted by Orrin Judd at July 26, 2007 1:47 PM
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