House and Senate Find Accord on Small Biz Incentive Part of Minimum Wage Hike

Senate Finance Chair Max Baucus (D-MT) has announced agreement in principle between the House and Senate on tax incentives for small businesses as part of the soon-to-be debated minimum wage increase. The primary provision is an 3.5 year extension of the Work Opportunity Tax Credit; additionally, the limit for Section 179 expensing would be increased to $125,000 and extending the low-income housing credit in the "Gulf Opportunity Zone." Other provisions, many of which raise revenue to offset the cost of the above provisions, include allowing married couples to file a proprietorship return for unincorporated businesses, a new penalty on unreasonable refund claims, an increased tax preparer penalty for understating tax liabilities, extending the "kiddie tax" provisions to under-19 (presently under-18) and making permanent certain IRS user fees.

Given the 2006 results, it is hard to imagine the minimum wage hike losing in Congress or being vetoed by President Bush. The Work Opportunity Credit sounds like a good way to encourage employment of people with marginal skills--the rest seems primarily to add complexity to the already complex IRC.