Reuters
Wednesday, January 17, 2007; 3:24 PM

WASHINGTON (Reuters) - The Senate Finance Committee approved about $8 billion in business tax breaks on Wednesday that backers said were needed to push a minimum wage increase through the narrowly divided Senate.

The bill would extend through 2010 a tax break for small businesses that allows them to immediately write off up to $112,000 in equipment expenses. It also extends through 2012 a work opportunity tax credit for businesses that hire poor or disabled workers. Other breaks for leased properties and restaurants would be extended through March, 2008.

"By acting today, we can help to create a sounder minimum wage bill," said Finance Committee Chairman Max Baucus, a Montana Democrat. He said the bill would be added to a measure raising the minimum wage from $5.15 an hour to $7.25 per hour.

The House of Representatives passed the minimum wage increase last week as part of the "first 100 hours" agenda of the Democrats, who won control of Congress in the November elections.

That bill did not include small business tax breaks that Republicans and President George W. Bush said are needed to help offset their costs for higher wages. The Senate may take up the minimum wage bill next week.

Sen. Charles Grassley of Iowa, the former Republican chairman of the committee, said Republicans would have preferred a different mix of small business tax relief but the bill addresses a "political reality" that "a minimum wage hike would likely not pass the Senate without small business tax relief."

To make up for the loss in revenue to the federal treasury, the bill also includes a number of revenue raising measures including higher Internal Revenue Service fees for bad checks. The bill also would close some foreign leasing loopholes and put new limits on the amount of executive compensation that can be deferred as a way to avoid paying current taxes.