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Congress approves wage hike, but veto is seen as a second chance

WASHINGTON Congress approved a supplemental war appropriations bill today that included a provision to hike the federal minimum wage to $7.24 an hour over a 26-month period, but the legislation is widely expected to be vetoed by President Bush. Pundits agree that a rejection of the measure could provide restaurateurs and other employer groups with a chance to push for more tax breaks to counterbalance the effects of the wage increase.

The bill, known as the Iraq Supplemental Conference Report, already extends $4.9 billion in tax breaks to small businesses, but earlier versions had provided as much as $12 billion in tax offsets. The National Restaurant Association applauded the inclusion of such measures as the so-called FICA tax credit fix, which extends an income deduction of the FICA taxes that restaurateurs pay on servers' tipped income. It also praised Congress for extending the Work Opportunity Tax Credit, a break offered to companies that employ persons perceived to be at a disadvantage in the job market.

But the association called the measure "extremely disappointing" because it did not accelerate the depreciation schedule for restaurants, which are treated under current regulations as declining in value far less rapidly than other retail businesses.

In its current form, the wage-hike provision would raise the national pay floor from the current $5.15 an hour to $5.85 within 60 days of the law's enactment. The minimum would rise again 24 months later to $7.25.

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