Hold the Credits: A Better Option for the Economy

The Tax Foundation
by Brian Phillips and Megan Carpentier

"The Senate Finance Committee plans to hold a hearing this week to consider attaching a series of business tax credits to legislation that will raise the minimum wage. Though their colleagues in the House are expected to pass a bill without such credits, Senators from both sides of the aisle and the President have suggested that Congress provide tax credits to certain businesses to offset the cost of the wage increase.

While some might consider this a wise compromise, it is not the best solution for from an economic perspective. There is no way hold businesses harmless through tax credits from a minimum wage increase; nor is it equitable to provide tax credits to some businesses that employ minimum wage workers and not others. Targeted tax credits simply cannot accomplish the stated goals and they have a number of negative consequences for the overall economy.

For these reasons, we encourage Congress to consider an alternative to targeted tax credits. Instead of allowing the minimum wage bill to become a vehicle for cluttering the tax code with more targeted tax credits, we ask Congress to consider the wisdom of simply lowering the tax rates for businesses large and small."

Like that is going to happen. Oh, well. To read the rest, go here.