WASHINGTON, United States (AP):

The US House of Representatives overwhelmingly approved business tax breaks worth US$1.8 billion (€1.4 billion) over 10 years last Friday, a crucial step toward forging a congressional compromise on increasing the minimum wage.

The vote on the tax cuts was 360-45.

The minimum wage bill had become the new Democratic majority's first legislative challenge. The US$2.10 (€1.60) an hour increase, from US$5.15 (€3.93) to US$7.25 (€5.53) over two years, was a Democratic campaign issue last year and was at the top of the party's legislative agenda.

Passage of a wage increase for the lowest-paid workers now depends on how quickly the House and Senate work out differences between their tax packages.

The Senate tax breaks, worth US$8.3 billion (€6.3 billion), are more than four times bigger than the ones passed in the House.

Under the House bill, small businesses would see an extension in some tax write-offs that are scheduled to expire and would be able to continue to claim tax credits for hiring poor workers.

The legislation also would ensure that restaurants, which can deduct Social Security taxes paid on tips above the minimum wage, would not be hurt by the wage hike. Social Security is the national pension scheme financed by both employers and workers.

Disagreement in the house

The bill stumbled when House and Senate Democrats disagreed on the need for tax cuts.

The Senate wants to extend tax credits and tax write-offs and provide new tax preferences to certain companies.

The Senate proposal also would eliminate some tax shelters and add new taxes on lawsuit settlements and punitive damage payments and on deferred compensation packages for higher-paid executives.

Groups representing small businesses, such as the National Federation of Independent Business, prefer the larger Senate bill.

The U.S. Chamber of Commerce supports the House bill because it objects to the Senate's revenue provisions, particularly the plan to eliminate deductions for payments in lawsuits.