Hill Democrats Reach Accord On Tax Breaks For Wage Hike

Congressional Democrats have agreed to include nearly $5 billion in tax breaks for restaurants and other small businesses in their proposal to raise the federal minimum wage, one of their top priorities.

The tax package strikes a compromise between the House and the Senate, which were pursuing dramatically different incentives for businesses affected by the wage increase. Both chambers voted to raise the minimum wage to $7.25 an hour, from $5.15 an hour, over two years -- the first increase in nearly a decade -- but the Senate wanted an $8.3 billion incentive package, and the House insisted that the price tag be kept to $1.3 billion over 10 years.

The compromise drops some of the most contentious proposals, including a measure to strictly limit deferred compensation plans, one of the most popular perks in corporate America.

The White House has indicated support for the minimum wage increase, but the measure is attached to an emergency spending bill for the Iraq war that President Bush has threatened to veto. Should he follow through on the threat, Democrats are likely to revive independent minimum-wage legislation.

-- Lori Montgomery