Tax breaks may affect minimum wage battle

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The Senate approved an increase in the federal minimum wage just before press time. But senators also added new tax breaks as a concession for small businesses.

As a result, representatives from each chamber of Congress needed to hammer out a compromise if the rate is to rise to $7.25 from the current $5.15 per hour. Experts said an increase would affect long-term care operators indirectly, with rising rates possibly making other employment options more attractive to frontline workers. Coming on top of proposed funding cuts for nursing homes, it would be an additional burden for providers, they added.
"Raising the minimum wage will cost some jobs," said Al Hubbard, the director of the president's National Economic Council. "We think it's important to counter that with tax breaks that will replace those jobs."
The Senate vote came on the heels of the passage of a wage-hike bill by the House that simply raised the minimum wage.
The wage increase, if it becomes law, will be the first in 10 years and will represent a victory for Democrats and the labor movement.
Senate Republicans were continuing to insist that the bill would not go through without tax breaks for the corporations, and President Bush has backed that position. At press time,a presidential veto had not been ruled out.

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