It may be impatience, or posturing, or good policy (in our view), but for whatever reason, Senate Majority Leader Harry Reid (D-NV) threatened last night to scotch the minimum wage tax package negotiations and schedule a(nother) vote on a "clean" minimum wage hike.

House and Senate taxwriters remain far apart in efforts to get the $1.3 billion House and $8.3 billion Senate "small business" tax packages into conference. Reid ironically favors the smaller House version, saying "I don't know how much more [Republicans] want." Senate Republican Conference chair Jon Kyl (R-AZ) meanwhile is calling for a "more robust" package than the House version, saying "it would be very difficult to send that bill to conference."

The prospect of the GOP blocking the conference has prompted Reid to threaten a clean wage hike vote: "They're going to have to make a decision on whether they wage to kill the minimum wage." But on January 24, the Senate failed to invoke cloture on precisely that measure, falling six votes short, 54-43. And most of the outside agitation has come from business groups wrangle over the two tax packages.

If you think the choice between the House and Senate minimum wage tax packages is a coin-toss between two fully-offset, revenue-neutral, fiscally fungible approaches, think again.

The Center on Budget and Policy Priorities' paper released today, Small Business Tax Package In Senate Minimum Wage Bill Poses Fiscal Risks, makes a strong case against the Senate's $8.3 billion package, built on two arguments:

• the offsets-as-opportunity-costs argument, is one we have voiced repeatedly -- here, here, and here -- that offsets used to pay for the $8.3 billion Senate package represent $7 billion more in offsets unavailable for other other initiative or deficit redunction than the House's $1.3 billion package. Concludes the report: "There consequently are concerns about the merit of these tax cuts as compared with other potential uses for the offsets."
• the offsets-and-sunsets problem: there are two new, temporary $1.9 billion accelerated tax write-off provisions in the Senate bill. Sure, they sunset on March 31, 2008, but who would wager against their extension, and re-extension? In which case, either they will consume more offsets with each extension (since almost none of the Senate bill offsets are permanent)

Or, worse:

Many in Congress [support] extending expiring tax provisions such as the "extenders" without offsetting the costs [and] oppose applying the PAYGO rules to tax cuts... At some point, Congress may allow the PAYGO rules to lapse, or may choose to waive those rules when extending expiring tax provisions because it proves difficult to [agree on] offsets. If that occurs, the addition of the Senate's two new temporary tax cuts to the list of tax "extenders" would add to deficits ad infinitum.

From a fiscal responsibility perspective, it hardly seems like a choice at all.

Linda Beale, law professor at Wayne State University Law School, provides a much more detailed rejoinder to the Wall Street Journal piece, Bill Clinton's AMT Bomb," than we could in our blog yesterday.

Her main points are as follows:

• The 2001-2006 tax cuts passed by the Republican-dominated Congress and the Bush Administration were packaged with no plan to repeal the AMT, since AMT revenues were needed to pretend that the tax cut package was considerably cheaper than it was known to be
• The AMT's reach is due to a combination of lack of inflation adjustment and the Bush tax law changes, which had a predicted and quantifiable impact, increasing the number of taxpayers paying AMT taxes and the tilting the distributional impact tax
• To suggest, per Sen. Grassley, that the cost of repeal of the AMT should not be taken into account because the AMT was never intended to tax who it taxes is utter nonsense. Congress fully intended for the AMT to continue to operate, or it would have repealed the AMT as part of its tax cut packages in 2001 or 2003. It gave priority to cutting the capital gains taxes on the wealthiest Americans, and not to preventing the AMT from creeping lower down into the middle income brackets than it would otherwise have done

Beale exposes the WSJ's peculiar logic most tellingly when she points out that

...the Journal blames Clinton for not indexing the AMT exemption to inflation. That's like the pot calling the kettle black. At some point, someone should decide just how far down the AMT is targeted, set the exemption appropriately, and then index it for inflation. But the Bush Congress didn't do anything but a year-by-year "fix" to the exemption amount, and even then only when it was pushed to do so. Why does the Bush-supporting and Clinton-bashing Journal pick out the failure of the 1993 changes to index the amount as the time it didn't get indexed, instead of the 2001, 2003, and other changes during the Bush administration?

Merrill Goozner informs us that the President talked up his health care tax initiative on Saturday. Seems like he's not going to let this one drop, but we'll see.

The Wall Street Journal published a particularly useless, factually-selective, poorly-argued partisan skreed last Friday about "how the AMT's relentless expansion in recent years is [the fault of] none other than William Jefferson Clinton" and how the AMT ("one more liberal monster that was created in the name of soaking the rich") has become "an excuse to justify repealing the Bush tax cuts."

The bottom-line warning of the (by-line-less) Journal piece:

Beware politicians who say they only want to tax the rich. Sooner or later their tax schemes will soak the middle class because that's where the real money is ... money Democrats in Congress would prefer to spend.

Fascinating. So, by this reasoning, Democrats seek excuses not to subject the $632 billion 10-year AMT "fix" to the strictures of PAYGO, while the deficit-fighting, fiscally responsible GOP would want to see it paid for?

Then how do you explain this quotation from the article?:

[A]s Senator Grassley [R-IA, ranking member of the Senater Finance Committee] notes: "This tax was never meant to tax the middle class, so why should we count it as a revenue loss when we make sure they don't have to pay it?"

Today, CBO released its biennial set of policy options, "to help policymakers in their annual tasks of making budgetary choices, setting priorities, and adapting to changing circumstances."

Some of the options seem particularly fiscally favorable, politically feasible, and equitable, among them:

• OPTION 17 -- Include All Income Earned Abroad by U.S. Citizen in Taxable Income. (5-year savings: $22.9 billion; 10-year savings: $57 billion)
• OPTION 24 -- Set the Corporate Tax Rate at 35 Percent for All Corporations. (5-year savings: $13.2 billion; 10-year savings: $27.6 billion)
• OPTION 32 -- Extend the Period for Recovering the Cost of Equipment Purchases. (5-year savings: $83.4 billion;10-year savings: $192.5 billion)

TOTAL 5-year savings: $119.5 billion;10-year savings: $277.1 billion

Perhaps some of these options could serve as good offsets. Maybe they could go toward an old-fashioned policy objective -- paying down the debt.

Check out Adam and Craig on TomPaine.com today -- "No New Taxes? Don't Read His Lips."

OMB Watch is pleased to annouce we have just released a new version of FedSpending.org with updated data, new features, and improved navigation. The new site is now live - see it yourself at www.fedspending.org.

OMB Watch issued a press release that describes the updates and improvments made to the site, and you can learn and see more about FedSpending v2.0 in the About This Site section, or by exploring the site yourself.

We welcome your feedback, comments, and questions about the new website, so please go to the Contact section of FedSpending.org and send us your thoughts.

At a press conference last week, White House press secretary Tony Snow applies the administration's familiar "let's you and him fight" strategy (that's worked so well to paralyze the entitlement reform discussion) to AMT reform:

... the alternative minimum tax is -- it's a cruel tax and it's an unacceptable tax. It needs to be fixed. We have 20 months to do it. And I certainly am not going to negotiate against myself or against anybody else in talking -- the question may be for you to ask, to turn back to those who are advocating tax increases is, would you consider not raising taxes on people?

"OK, we'll get right back to you, Tony, after we're through negotiating with ourselves."

The most galling aspect of Snow's snide statement isn't so much the tiresome aspersions he's casting on Democrats struggling to find revenue-neutral solutions to AMT's bracket creep.

It's his brandishing the tax increase issue long after the administration has already made clear that it could support a net-revenue-neutral solution, even if it includes a tax hike element.

On Friday, there was a great article ($) in the Wall Street Journal about the AMT and some of the options Democrats have in fixing it. The article's strength, however, is in its summary of the AMT.

The Bush tax cuts have accelerated the AMT's reach into the middle class, by reducing the amounts those households would pay under the regular income tax. That's particularly true for families claiming multiple child credits.

The White House and key lawmakers in both parties agree some kind of fix should be enacted to prevent the AMT from reaching further into the middle class, at least for this year. The big question: If Congress passes a bill raising taxes to finance such a measure, would President Bush, a staunch opponent of tax increases, veto it?

Mr. Bush is likely to remain firmly opposed to raising marginal tax rates. But administration officials have been quietly suggesting that he wouldn't necessarily object if Democrats passed a "revenue neutral" bill that cut taxes paid under AMT and raised them elsewhere to offset any revenue lost to the Treasury.

Though short of an in-depth discussion about various tax code changes that could off-set AMT revenue losses, the article does mention these proposals:

A group of Democratic senators yesterday unveiled a proposal for new middle-class tax breaks, including extending AMT relief for two years. A spokesman for one of the sponsors, New York Sen. Charles Schumer, said the lawmakers would suggest paying for that relief through some combination of higher taxes on oil companies, higher taxes on families making more than $400,000 a year, and ramping up enforcement to grab more of the "tax gap," taxes that the Internal Revenue Service says are owed but persistently aren't paid.

The chairman of the Senate's tax panel, Montana Democrat Max Baucus, recently proposed eliminating the AMT.

Beyond the next year or two, House Democrats are studying how they might enact a longer-term AMT reprieve for some taxpayers. One option under discussion would permanently exempt households with annual incomes of as much as $250,000 from paying the AMT, with some kind of graduated relief for those between $250,000 and $500,000. To offset the revenue shortfall, people making more than $500,000 a year could be required to pay more tax, either through a higher AMT rate, or higher regular income-tax rates.

The behind-the-scenes struggle over the shape and size of the minimum wage tax package (covered here, here, with an outside critque here) is intensifying, with the White House weighing in heavily and a group of GOP senators raising new objections.

The Admin's Feb. 13 Statement of Administration Policy on H.R. 976 endorses the $8.3 billion small business tax cut adopted by the Senate in S. 2. It is not surprising the president favors more tax cuts, but the timing of this release throws more fuel on the fire heading into a conference negotiation between the two chambers.

Making things even worse for the minimum wage, 10 conservative GOP Senators sent Senate Finance Committee chair Max Baucus (D-MT) and ranking member Charles Grassley (R-IA) a letter ($) last week opposing S. 2's retroactive shutdowns of tax shelters in the sale-in, lease-out (SILO) and corporate inversion provisions.

What does this inside-tax-baseball all mean?

If nothing else, it means more delays for the minimum wage bill and may reinforce the public's view that Congress and the President are far more pre-occupied with corporate tax policy than with updating a wage floor that has gone untouched over the last decade. Over that decade, the minimum wage has lost more than a quarter or its purchasing power as politicians have squabbled - it seems some in Congress have already forgotten the mandates from last November's elections.

POSTSCRIPT: Today's New York Times editiorial, Minimum Wage, Minimum Tax Cuts, makes a point worth noting: if the cuts in the S.2 package were not just extended but renewed for 10 years, the cost would be $47.5 billion.

Posted by Dana Chasin, 12:40:29 PM



Cheney-nomics

Vice President Cheney, speaking to the National Association of Manufacturers yesterday:

By now it's time for even the skeptics to admit that a lower federal tax burden is a powerful driver of investment, growth, and new jobs for American workers. And that increased economic activity, in turn, generates revenue for the federal government.

Ummm...you mean even the "skeptics" at your very own Treasury Department? Even they say that permanent tax cuts will make the economy smaller and reduce revenues.

These people will keep peddling this snake-oil unless they are persistently confronted with the evidence. Why isn't Congress doing more to counter this nonsense? The facts are on its side.

Referring to the $1 trillion dollar, 10-year cost of AMT repeal, as we did here, suggests a greater cost than necessary to protect middle-class taxpayers from AMT liability via reform, a distinction we have drawn before in discussing long-term approaches to the AMT.

A paper today from the Center on Budget (CBPP) addresses some myths surrounding the AMT, among them, that the only way to protect middle-class households from the AMT is to repeal it. But as we've shown and CBPP concedes, even though a fix that better targets relief toward middle-income households would be "considerably less expensive than repeal," it would still cost hundreds of billions of dollars over ten years, whether or not the 2001 and 2003 Bush tax cuts are extended.

Sen. Charles Grassley (R-IA) says "it's ridiculous to rely on revenue that was never supposed to be collected in the first place. Another trap is raising taxes to 'pay' for AMT repeal. It's unfair to raise taxes to repeal something with serious unintended consequences like the AMT." But this doesn't necessarily mean offsets aren't necessary, so Rangel and Co. should count on a lot of offseting mining ahead of them.

House Ways and Means Committee chair Charles Rangel (D-NY) is on a scavenger hunt. With his sights on major Alternative Minimum Tax (AMT) reform, he's on the lookout for offset provisions, the bigger the better. Reportedly, he's agreed to have House Select Revenue Subcommittee chairman Richard Neal (D-MA) vet solutions to the problem of how to keep the AMT from engulfing millions more taxpayers this year and beyond. None of the solutions will be cheap; all will require offsets.

Neal plans to open hearings in March on ways to pay for the $1 trillion cost of repealing the AMT, and Rangel has given notice that corporate tax breaks extended by Congress in recent years may come under scrunity.

A Bloomberg article on this issue, published Monday, spotlights some of the largest of these breaks, putting a few companies' effective tax rates under the microscope. General Electric Co.*, an example it cites, reduced its overall U.S. tax rate to 18 percent in 2005 from 32.5 percent in 1995, largely because of the rules congressional Republicans enacted during those years. "Eli Lilly, Hewlett-Packard* and other companies have also pushed their tax rates well below the top marginal rate of 35 percent in the last decade by basing operations in lower-tax countries and taking advantage of the U.S. rules," it adds.

Measures limiting the foreign tax credits companies claim for payments to other governments or setting new regulations on transactions that shift income from subsidiaries in higher-tax countries to those in lower-tax ones are politically and fiscally tempting.

It's unlikely that Rangel and Neal have a sweeping policy change in mind, but rather some quick hits. Most likely the initial focus will be on abuses of current law that Neal says are costing the government "an awful lot of money."

Just what the chairman ordered.

--------

* Incidentally, major federal contract recipients as well. See OMB Watch's FedSpending.org current company contractor profiles for:

General Electric

Hewlett-Packard

The President's supporters have been contradicting the findings of a 2006 Department of the Treasury study while defending the Bush tax cuts. Check out this new OMB Watch fact sheet for the story.

As of this writing, the House Ways and Means Committee is marking up a $1.3 billion tax package proposal co-sponsored by Committee chair Charles Rangel (D-NY) and ranking member Jim McCrery (R-LA).

The package, H.R. 976 (the Small Business Tax Relief Act Of 2007), would accompany the House minimum wage bill when it is conferenced with the Senate bill, which combines a minimum wage hike and an $8.3 billion tax package. H.R. 976 is expected to clear the Committee today and the full House when it comes up for a vote, perhaps as early as this Wednesday.

The Joint Committee on Taxation has published a scoring of H.R. 976's tax costs, totaling $1.335 billion over 10 years, as well as a detailed description of the bill's provisions.

The bill's principal tax benefits include:

• a one-year extension of the work opportunity tax credit (WOTC) -- the Senate bill provides a five-year extension -- expanded to cover veterans and high-risk youth (estimated cost: $695 million over ten years)
• a waiver -- not in the Senate bill -- of alternative minimum tax limitations that keep some small businesses from claiming the WOTC and the credit for Social Security taxes paid on cash tips ($552 million)
• a one-year extension -- which the Senate bill also provides -- of tax code Section 179 small business expensing through 2009 ($68 million)

The bill's main offsets include:

• disallowing use of the lowest capital gains and dividend income rates to wealthy dependents that occurs when parents shift assets to children qualifying for the lower rates (estimated revenue: $874 million)
• allowing the IRS an extra four months--22 months instead of 18 months--to notify taxpayers of failure to comply with tax obligations before the service is required to suspend interest and penalties ($506 million)

H.R. 976 includes none of the $8.3 billion in offsets in the Senate bill, a relief to larger corporations. And its WOTC and Section 179 tax benefits amount to less than a fifth of those offered in the Senate version.

The upshot: in size and content, the two bills differ significantly and the outcome of a conference is hard to predict, with diverse elements of the business community at loggerheads.

UPDATE: H.R. 976 was unanimously approved tonight by the Ways and Means Committee by voice vote. It will now move to the House floor, with a vote possibly as soon as Wednesday.

EJ Dionne's column on budget trade-offs and priorities is a good read. This president will defend tax cuts by any means necessary.

It was one of those moments when a public official gives away a larger truth by offering what seems to be a throwaway line.

Testifying this week on President Bush's budget, Treasury Secretary Henry M. Paulson Jr. suggested he would not mind a bit if the Democratic Congress added money to prevent cutbacks in coverage under the federal government's children's health insurance program.

"It just may be," Paulson said mildly, "that the Congress believes that that's something that should be funded at a higher level."

As reported here yesterday, House Ways and Means chair Charles Rangel (D-NY) has agreed to offer a tax package counter-proposal to the Senate's $8.3 billion, ten-year package, approved last week as part of S. 2, the Senate minimum wage bill.

Rangel is collaborating with Committee ranking member James McCreary (R-LA) to craft a package that will clear the Committee and the House quickly. Reports are that they will put a $1-1.5 billion proposal before the Committee for mark-up on Monday, but the elements of the package are still under discussion.

Options under consideration are slowly emerging. "A main feature of the Ways and Means proposal is expected to be a tax credit for businesses that hire disadvantaged workers, including wounded veterans and the poor," AP is reporting this morning. Speculation is that Rangel hopes to pay for an extension of this Work Opportunity tax credit with tax gap offsets, while McCreary is focused on Section 179 small business expensing extensions.

Small business and corporate groups, meanwhile, are at odds regarding which offsets in the Senate package to make sure are omitted in the House proposal.

This just in, per today's CongressDaily ($):

House Ways and Means Chairman Rangel said this afternoon he would move to break the House-Senate stalemate over minimum wage legislation by marking up a small business tax bill next Monday [which] he expects it to be "in the vicinity of $1 billion." It will also include about $1 billion in offsets to make it revenue neutral.

Rangel insisted for weeks on passage of a "clean" minimum wage bill -- one containing no tax breaks. Today, Rangel insisted that he will not let his arm be twisted in conference negotiations over the size of the tax package.

House Ways and Means Committee chair Charles Rangel (D-NY) has dropped subtle hints before, as we have noted, that he would consider a compromise on the $8.3 billion tax cut package the Senate attached to the minimum wage bill it passed last week. But speaking to reporters yesterday, Rangel now says he is "prepared to send something over there for [the Senate] to be able to attach a tax package" for the sake of getting the bill to the President's desk.

While Rangel did not indicate the nature or scale of what he might send the Senate, he implied it would cost much less than the Senate package, saying: "When we start with $8 billion, my hearing aid is off." He has indicated his sensitivity to the opportunity cost of expensive PAYGO-required offsets to pay for tax cuts, saying earlier that "$8 billion is a lot of money, and the pay-fors--I don't want to lose that either."

To illustrate, the biggest offset in the Senate package, closing sale-in-lease-out (SILO) leaseback loophole, where companies purchase assets and lease them back to the prior owner to create a tax deductible loss, adds almost $4.3 billion in revenue over the next five years.

Does it make sense from a public interest standpoint to use that offset to purchase additional tax breaks for business, or to spend that money to insure an additional two million children over the next five under the Children's Health Insurance Program?

It's not an idle question, since Congress is likely to address the CHIP program shortfall in the President's proposed budget, which would make it impossible to maintain the current number of kids covered under the program and, under PAYGO rules, would need to find a way to pay to make up that shortfall.

We have showcased a number of omissions, deceptions, and exaggerations this week within the president's FY 08 budget proposal, but another fine point was uncovered this week as well that missed our notice. It concerns assumptions for how much revenues will grow over the next five years.

The Congresstional Budget Office, a nonpartisan office in the legislative branch, does projections and estimates for specific legislation moving through Congress, as well as larger, long-term economic and budget projections across the government. Recently, CBO released their Budget and Economic Outlook for the next ten years. In that report, they project revenues will grow 5.8 percent over the next five years.

The president's budget, however, projects revenue growth at 7 percent over the next five years. This translates into $425 billion in additional revenues than CBO believes will materialize over the five year period and a hefty $157 billion in FY 2012 alone - the very year the president expects his policies to yield a $61 billion government surplus. Even if revenues grow at a slightly lower rate, the president's surplus projections will disappear.

This is just yet another example of many instances of extremely wishful thinking in the president's proposal that allows him to state that his budget will balance the budget by 2012. That, and the fact that he is planning on raising taxes on the middle class.

In the Washington Post today, Ruth Marcus recognizes that Bush is relying on a tax increase via the AMT to claim that he can balance the budget without raising taxes.

Looked at another way, what the Bush tax cuts give to taxpayers, the AMT grabs back. By 2012, if it isn't changed, the AMT would take back almost one-third of the Bush tax cuts...it would take back more than half of the tax cut for people making between $100,000 and $200,000.

...the AMT has been transformed from its original purpose, a means of assuring that the wealthiest pay at least some taxes, into a way of underwriting tax cuts for the wealthiest. Because the AMT hits fewer of those with the highest incomes, the rather comfortable end up subsidizing Bush's tax cuts for the super-rich.

Marcus's piece makes some other good points and neatly summarizes the coming troubles (or fixes as far as Mr. Bush is concerned) that the AMT will cause for middle-class taxpayers. She ends her column wondering:

That leaves the middle class, the better-off and corporations to divvy up the tab. In that context, does it really make sense to permanently repeal the estate tax? To leave in place lower tax rates for the richest Americans? To continue to tax capital gains and dividends at far lower rates than ordinary income? These are the choices that the Bush budget entails, even if it fails, deliberately, to spell them out.

OMB Watch has released a preliminary analysis of the President's FY 08 Budget request.

President's Budget Full of Cheap Rhetoric; Wrong Priorities
President Favors Tax Cuts for the Wealthy over Domestic Needs

Check back here for additional analyses and commentary on the budget as the week progresses.

President Bush's FY2008 budget proposal includes a nearly $60 billion Alternative Minimum Tax (AMT) increase by apparently eliminating the patch that has held steady the number of taxpayers liable under AMT for the last several years.

The President's budget projects FY2008 revenue losses from the current patch at $47.9 billion -- a figure that has been slowly climbing in recent years as inflation exposes greater numbers of taxpayers to the AMT, which is not indexed for inflation.

Instead of a similar or larger revenue loss figure one would expect from the extension of the patch for FY2009, the President's budget projects an increase in AMT revenue for that year of $11.4 billion. The $59.3 billion revenue gain corresponds suspiciously closely to the amount that would be lost to a patch.

That's what President Bush calls a tax hike -- one we might otherwise expect him to veto. For details, see Table S—6. Effect of Proposals on Receipts.

At a time when there is a strong bipartisan commitment in Congress led by Ways and Means chair Charles Rangel (D-NY) to sharply rein in, and eventally eliminate, the AMT, a proposal Bush proposal to expand the tax is likely to be viewed not just as a tax policy paradox, but -- along with Bush's war cost projections -- as merely another desperate measure to justify his projections of a $61 billion budget surplus by 2012.

This afternoon, after almost two weeks of floor debate and 200 filed amendments, the Senate passed S.2, the Fair Minimum Wage Act of 2007, by a vote of 94-3.

The bill comprises:

• a set of increases in the federal minimum wage to be phased in in three stages, rising to $5.85 an hour 60 days after enactment, then to $6.55 an hour one year after that, and $7.25 an hour two years later
• an expansion of several existing small business tax breaks totaling $8.3 billion over ten years, including the work opportunity tax credit, faster depreciation for building improvements, mostly targeted at restaurants, and the deduction of business expenses for equipment under Section 179 of the Internal Revenue Code, with offsetting revenue raisers aimed mostly at large corporations

All eyes now are on House-Senate negotiations, which will focus on whether the Senate's tax breaks are scaled back or stripped out in a conference with the House, which doesn't want them. "The minimum wage will be increased. The question is do we need all these business pieces of sugar or not," said Harry Reid (D-NV), the Senate Majority Leader.

Posted by Dana Chasin, 06:42:49 PM



Bush's Health Care Plan and the AMT?

Brad DeLong has a question about Bush's health care plan as described in the SOTU speech:

A question. When George W. Bush said:

[Although we are adding the value of health insurance contributions by employers to the income subject to personal income and payroll taxes, we are adjusting things so that] families with health insurance will pay no income or payroll taxes on [the first] $15,000 of their income. Single Americans with health insurance will pay no income or payroll taxes on [the first] $7,500 of their income...

Did he mean, "But the Alternative Minimum Tax will still apply to all income reported on your W-2, plus the value of health insurance contributions made by your employer, with no adjustment for this new health deduction"?

This is a particularly interesting question in light of the fact that tax cuts enacted since 2001 have pushed more taxpayers into AMT liability. Will the same tactic be used to make Bush's health care plan appear cheaper than it really is?

(source Tax Policy Center, "The Individual Alternative Minimum Tax (AMT): 11 Key Facts and Projections")

The Senate is scheduled to vote on the minimum wage package today at 2:30 PM...but now's a good time to check out Max Sawicky's erudite take on the unnecessary tax cuts attached to the minimum wage bill. One key passage on the tax cuts, AKA the Small Business and Work Opportunity Act of 2007 (SBWOA):

The proposed SBWOA tax cuts pertaining to depreciation and S-corps share an utter lack of targeting to any business owner affected by a minimum wage increase. They could just as easily benefit owners not affected, owners helped by the increase, and people who own no business at all but elect to invest in an old business or begin a new one in the future. The tax cuts could benefit a firm with no minimum wage employees, or a firm with no employees at all. They are completely unrelated to a business firm’s labor costs, past, present, or future.

From the standpoint of tax fairness, a business owner might be very wealthy, or he might be barely hanging on in business. Some critics of Social Security cast doubt upon the merits of providing any retirement benefits to well-off retirees. By contrast, any conceivable compensation from a business tax break has no relation whatsoever to the economic circumstances of the taxpayer in question. Businesses don’t pay taxes, people do. No tax break pertaining to a business entity can be premised in any way on the household income of the business owner who would benefit.