Pricey Harrison

Friday, August 19, 2005

Health Care Tax Credit, Small Businesses/Increase In Minimum Wage

The House passed legislation that will provide a tax credit for small businesses that provide health insurance to employees and increase the state’s minimum wage. The legislation, HB 20, combined the two issues and the bill sponsors, Reps. Hugh Holliman (D-Davidson) and Alma Adams (D-Guilford) argued the bill would help our state’s workers and small business owners, while ensuring better access to health care for more North Carolinians.

First, the bill would provide a tax credit for small businesses that provide health insurance to employees, which business leaders have said is one of the biggest expenses that they continue to struggle to meet for their employees. Rep. Holliman said that we are all looking for ways to help our small businesses with less than 25 employees grow and prosper and this bill accomplishes this goal. The National Federal of Independent Businesses supports this tax credit, but opposes the combination bill. An amendment offered by Minority Leader Joe Kiser (R-Lincoln), which doubled the credit, was approved by the chamber.

Secondly, the bill would increase the state’s minimum wage to $6.00 per hour. The national minimum wage of $5.15 has not increased since 1997 and inflation has eroded 14 percent of its buying power since then, supporters argued. Fifteen states and Washington, D.C. now have minimum wages greater than $5.15, and Florida recently raised its minimum wage to $6.15, indexed to inflation, which resulted from a 2004 ballot initiative that was approved by 71 percent and passed in every county.

The 85-cent increase is a compromise on a previous bill, which originally sought to increase the wage to $8.50 by 2007, but in June, was scaled back to $6.15 over the next year. The N.C. Budget and Tax Center said that modest increases in the minimum wage would have minimal or no impact on employment in the state despite opponents’ claims stating otherwise.

There have been approximately 20 wage increases over the past 67 years and supporters argued with opponents of the bill and said no evidence exists that prove that an increase leads to lost jobs. According to the census bureau, there are approximately 101,000 North Carolinians (3% of our state’s total workforce) making minimum wage or approximately $10,700 per year, and roughly half are breadwinners of a family and do not receive other state assistance such as Medicaid to help with expenses. Of these workers, three-fourths are 20 years and older, which includes 51.8% who are over 25 years old.

On the Senate side, a committee agreed last week to raising the state’s minimum wage to $6 per hour, but in a different way. The Senate instead included the wage increase as part of a tax package that would also reduce corporate and income tax rates, raise the cigarette by another nickel a pack, rework personal income deductions, and not provide the tax credit for small businesses. The House does not support a tax cut for our state’s wealthiest individuals and corporations as the Senate is proposing at this time.


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