RETAILERS LOBBY FOR LEGISLATION TO EXTEND WORK TAX CREDIT
Byline: Joanna Ramey
WASHINGTON — Retailers may not be able to beat back Congressional efforts to increase the $5.15 federal minimum wage by $1, but they have a shot at getting legislation to extend for another five years a tax credit they dearly love.
The Work Opportunity Tax Credit encourages retailers to hire hard-to-employ individuals by offering a 25 percent credit on the first $6,000 of their wages.
The credit is a favorite in Congress, but lawmakers often let it expire and then wait months before renewing it. This see-saw approach, retailers argue, makes it difficult to take advantage of the tax break. About 100,000 people have been hired by employers using this credit since the law went into effect in 1996. The credit next expires in January.
A $46 billion tax-cut package passed Thursday in the House, designed to offset a higher minimum wage, doesn’t include the tax credit. Senate legislation passed in November would extend the credit for another five years.
The two bills now must be reconciled, and a few procedural hurdles and a threatened presidential veto must be overcome. President Clinton, who supports the wage hike, is opposed to the Republican-backed tax plans being part of a wage package. He argues the tax breaks are too extravagant.
However, Clinton has said he’s interested in passing a smaller tax-cut proposal, leaving the door open for negotiations and possible inclusion of a five-year extension of the work tax credit, said Katherine Graham, director of government relations for the National Retail Federation.
The tax credit has bipartisan support in Congress, so chances are good votes can be rallied to extend it for another five years when it expires, Graham said.
Other tax breaks included in either the Senate or House would phase out the estate tax over several years, make health insurance premiums for the self-employed fully deductible and increase deductions for business meals.
An election-year hike in the minimum wage appears imminent.
The only battle remaining is whether the increase should occur over two years — as the House voted — or three years, as the Senate bill stipulates. Clinton has said he’d veto any bill that contains a phase-in longer than two years.
This would be the first increase in the minimum wage since 1997.
Retailers are again helping to lead the fight against a wage hike. In a letter sent last week to House members, Steve Pfister, the NRF’s senior vice president for government relations, said an increase would stifle new hires.
“Congress should take note that Federal Reserve Board chairman Alan Greenspan has spoken frequently of the negative implications for the labor market if an increase is passed,” Pfister wrote.