It's almost official: After many controversial discussions surrounding the proposed minimum wage hike, it was finally approved by Congress on Thursday. This will be the first increase in the federal minimum wage in almost a decade. The hike will raise the minimum wage to $7.25 an hour, up from $5.15. The bill now has to be signed by Pres. Bush, but according to a spokesman for the president, he's expected to sign it. The wage hike will be considered a victory by congressional Democrats, since it's an issue that has been met with objections from the White House and many Republicans. White House spokesman Tony Fratto said the tax package "isn't sufficiently focused on the economic concerns of small businesses who will be most negatively affected by the minimum wage hike." On the other hand, House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.), said the package actually "targets tax relief to small businesses."
The measure does make some allowances for small businesses, including extending a law allowing them to quickly deduct $112,000 for equipment purchases and raising the deduction amount to $125,000. Also, married couples operating unincorporated businesses would be allowed to file as sole proprietorships, which would simplify their tax returns.
The rate hike would go into effect 60 days after the bill is signed by Bush, though it would increase steadily over the next few years. The first increase would be to $5.85, then a year later, the wage would rise to $6.55 an hour, and $7.25 the following year.