Cornyn Backs Minimum Wage Increase That Includes Critical Small Business Protections

Cornyn Backs Minimum Wage Increase That Includes Critical Small Business Protections

U.S. Senator John Cornyn, a Member of the Senate Budget Committee, today made the following statement regarding H.R.2, the Fair Minimum Wage Act of 2007, which passed the Senate this evening by a vote of 94 to 3.

"This bipartisan legislation, which I supported, helps low-income workers while protecting small businesses and their employees from the consequences of raising wages in the marketplace. Small businesses are the number one creator of new jobs in America and they deserve our support. By helping them with this important tax and regulatory relief, we'll ensure that the economy continues to grow.

"I do believe however, that we should aspire to more than a minimum wage for the American people. Raising the minimum wage only puts a patch on the symptom of a larger problem. We should instead continue to provide the training and educational opportunities that allow individuals to enter the work force and move up the economic ladder. It is critical that every American receive a quality education, and we must continue to pursue avenues to ensure this is not merely a dream, but a reality. I strongly believe that workforce training programs are critical to continuing the economic upswing in the U.S. and these issues will remain a priority for me in the Congress."

Background:

Small businesses employ half of all private sector employees and created between 60 and 80 percent of net new jobs annually over the last decade, according to the Small Business Administration. However, small businesses are more vulnerable to the impact of increased costs. The Congressional Budget Office estimated that the minimum wage increase would impose $4 billion in new costs on the private sector in 2009 and $5.7 billion in 2010, with the increased costs extending at roughly $5 billion each year. Small businesses would incur the bulk of these costs, and they could be forced to lay off workers if offsets are not provided.

The following tax relief provisions were included in the legislation:

* Expensing- A one-year extension of a provision allowing small businesses to combine as much as $112,000 in expenses into one annual tax deduction.

* Leasehold Improvements- An extension through March 31, 2008, of the provisions that allow property owners to more quickly deduct the cost of making improvements to a restaurant or to leased property. Also, extends the provision to apply to improvements made to owner-occupied retailer space and for the construction of new restaurants.

* Cash Method of Accounting- A permanent change to the tax code that will allow more businesses to simplify their bookkeeping by allowing them to use the cash method of accounting for tax purposes.

* S Corp Reforms- A modification to the standards that allow small businesses to qualify for or stay within the S Corp tax rules.

* Certified Professional Employer Organizations - Establishes a certificate program for Companies that provide and oversee employees for other corporations. The certification would require these companies to meet certain standards set by the IRS. Businesses that contract with certified professional employer organizations would be assured they would not be liable for those taxes already paid to the certified professional employer organization.

* Work Opportunity Tax Credit- A five-year extension of the tax credit provided to employers who hire workers who have experienced barriers to entering the workforce. Also, a modification to the work opportunity tax credit to include a tax credit for employing veterans disabled after the September 11, 2001 attacks.

http://cornyn.senate.gov/index.asp?f=record&lid=1&yid=1&rid=237300&pg=1