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Democrats Push More Aggressive Minimum Wage Plan, Use Taxes as Lure

Bill Clark/CQ Roll Call
Harkin is introducing legislation to increase the minimum wage from the current rate of $7.25 an hour to $10.10 an hour. The bill goes beyond what the president has called for.

Senate Democrats are looking for sweeteners such as small-business tax incentives they hope will attract support from Republicans and constituent groups for a plan to raise the minimum wage to a level beyond what President Barack Obama has proposed.

Health, Education, Labor and Pensions Chairman Tom Harkin of Iowa said in coming months he wants to move a new proposal (S 460) that would increase, in stages, the current minimum wage of $7.25 an hour to $10.10 an hour.

“If the minimum wage had kept up with rising prices for food, rent, utilities, clothing and other goods, then the wage would be $10.56 today. But instead it’s $7.25,” Harkin said in a statement. “My bill will restore much of the buying power of the minimum wage.”

Supporters include Democratic Sen. Benjamin L. Cardin of Maryland, a tax writer, who says small-business tax incentives should be coupled with the proposal to help offset concerns of businesses about the impact on overall wage costs.

Democrats point to the 2007 minimum wage hike (PL 110-28), which was combined with small-business tax incentives, as a possible model.

“What gets connected to it will be related to business, and small business particularly,” Cardin said. One plan, he said, may include his own draft proposal to provide more incentives for “S corporations,” businesses that are taxed through the individual filings of shareholders.

Harkin’s bill goes well beyond Obama’s proposal to increase the federal hourly minimum wage from $7.25 to $9 in stages.

That idea has drawn protests from Republicans and business groups. But allies say Harkin has a strong base for action, with the support of 25 members of the 55-member Democratic Caucus, including Majority Whip Richard J. Durbin of Illinois and Charles E. Schumer of New York.

Cardin said he and other supporters hope to gain momentum from the push for a tax overhaul on Capitol Hill. “It could ride along with it,” Cardin said.

Finance Chairman Max Baucus of Montana helped engineer the small-business tax incentives that were attached to the 2007 minimum wage increase with his longtime ally, Charles E. Grassley of Iowa, then the panel’s ranking member. But Baucus and Grassley both have been cool to the latest minimum wage increase proposal.

Baucus said this week he did not envision a minimum wage increase being part of his panel’s discussion of a possible framework for a tax overhaul in coming weeks. “When we consider tax reform, I doubt that minimum wage is a part of anything that we can propose,” Baucus said.

Grassley said he flatly would not support another minimum wage hike.

“It’s a bad time to do it,” he said. “Somebody’s not going to get a job.”

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