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House Committee puts tax breaks in wage bill

WASHINGTON The foodservice industry claimed a modest victory when the U.S. House of Representatives' Ways and Means Committee passed a federal minimum wage compromise bill that included several tax breaks for restaurants and other small businesses.

The bill, which is expected to be taken up by the entire House this week, extends for one year the Work Opportunity Tax Credit, or WOTC, and increases the amount of capital spending a restaurateur can write off. An operator would be permitted to deduct up to $125,000 of investment in equipment through 2010. The maximum deduction is currently $112,000.

The measure also gives operators a break on how to calculate deductions for Social Security taxes paid on tips.

While the National Restaurant Industry applauded the inclusion of the FICA tax credit, it voiced disappointment that the measure did not include a provision on accelerated depreciation for newly constructed restaurants, which had been included in the Senate measure along with the WOTC extension.

The original House bill included no tax breaks. The House and Senate had passed separate measures hiking the hourly wage from $5.15 an hour to $7.25 over two years. The two bills must be reconciled now.

President Bush has said he favors a plan that includes offsets that would help businesses cope with the higher payroll costs.

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