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Minimum wage and tax deduction are on the Congressional radar

There hasn’t been much coverage yet of Congress increasing the minimum wage, but it doesn’t mean the idea hasn’t got legs. In fact, it has considerable support, even if the amount of the increases varies depending on the legislator.

For example, President Obama’s proposed budget calls for a new minimum wage of $9 per hour, up significantly from the current $7.25. Trumping the President’s figure is Sen. Tom Harkin, D-Iowa, who is already sponsoring S.460 that would hike the minimum wage to $10 an hour. What’s notable is that Harkin already has 30 other senators signed on as co-sponsors.

In the House, a companion bill (H.R.1010) at $10 per hour was introduced by Rep. George Miller, D-California. His bill already has 140 co-sponsors on it.

“The significant number of co-sponsors in both the House and Senate,” MRAA Washington lobbyist Larry Innis says, “certainly increases the chances of passage. If that were to happen, it’s likely to have a negative impact on dealerships and job creation and that’s why we are following it closely. On the other hand, it’s certainly not a done deal. A big challenge can be expected in the House. That said, however, we’ll keep the issue very high on our MRAA radar.”

As a sidebar, be happy you’re not a dealership in Washington, D.C. or you’d be watching the D.C. City Council consider passage of a “living wage” bill requiring a minimum of $12.50 an hour. Interestingly, the AP reports that Wal-Mart is threatening to walk away from three planned stores in the District if the council passes such a bill.

An equally strong blip on the MRAA scope is the second-home mortgage deduction. It’s potentially in play once again as Congress considers major tax reform. That’s not to ignore the prospect that a major stumbling block is that GOP senators believe Democrats will insist higher revenues be included in any such bill and that, they say, will make any real tax reform doubtful.

Senate Finance Committee chairman Max Baucus, D-Mont., and Sen. Orrin Hatch, R-Utah, the panel’s top ranking Republican, have given all senators until July 26 to make the case for credits and deductions that they think should be written into a tax reform bill. But it’s unclear how many senators will participate.

Clearly, the second-home mortgage deduction has a positive impact on the sale of larger boats and sustaining it has been a principled position of the marine industry. And, there’s some good news in that a House Concurrent Resolution was submitted by Reps. Gary G. Miller and Brad Sherman (both California Democrats) that: “Resolved by the House of Representatives (the Senate concurring), that it is the sense of the Congress that the current federal income tax deduction for interest paid on debt secured by a first or second home should not be further restricted.”

The resolution has been sent to the House Ways and Means Committee, and while a resolution is always non-binding, it does add solid support for the industry’s desire to see the second-home deduction maintained if tax reform should actually happen.

Comments

5 comments on “Minimum wage and tax deduction are on the Congressional radar

  1. Ed Parker

    In my view, the second-home mortgage deduction is a tax burden on working-class people like me who can barely afford to keep one home, never mind a vacation cottage or a yacht. Here’s a thought: How about you folks who want a second home (or a boat) just pay for it yourself instead of asking us taxpayers for another handout. We’re a little maxed out these days. Just my 2 cents.

  2. vissionquest

    Any work on boats has become highly technicaland complex. With environmental rules and quality as a bench mark, why would anyon\en this industry not realize that you will not get a new employee of any worth if they can not afford to live on their wages. The hardest part of this industry is attracting people willing to put in the long years to learn the variety of skills needed. To not support a minimum wage is short sighted mission that will prevent young people from experiencing and getting involved in this industry.

  3. Steve

    If you want to continue to have a society that caters only to the top few percentages of income earners, then oppose the minimum wage increase and the second home deduction. But all of you who build the smaller and less expensive boats might as well plan to scale down your businesses or start building boats for the wealthy or enter industries that support the wealthy as they are more and more every day becoming the main spenders in our society. It will be the upper classes with the lower classes serving them.

    When will people learn that a healthy economy is when the majority of the people have enough money to buy goods that create the middle class as the main class to serve and sell to? We are already there and it gets worse every day, yet there are those who still only see short-term dollars by selling to the luxury market. These people all would have been much happier in the middle ages when there was only the royal class and the common people served them.

  4. Jeff Erdmann

    Eliminating the mortgage interest deduction on boats / yachts is a politically good sound bite but does not hold water.

    Under current law mortgage interest is deductible for both primary & 2nd homes with combined principal balances up to $1 million plus an optional $100k line of credit.
    Qualifying 2nd home deduction includes: Homes – cabins – condos – town homes – RV’s – boats if they have a place to sleep cook & a toilet.

    Repealing the entire 2nd home mortgage interest deduction could raise $8 billion per year, about 1/4 of one percent of the $3.034 trillion projected revenue for 2014.

    If congress needs to eliminate the interest deduction on all 2nd homes the recreational marine industry would take its lumps along with the real estate industry and the RV industry. Singling out boats “a small drop in an $8 billion bucket” would not raise enough to justify scuttling more jobs in the already sinking recreational marine industry that currently employs about a million U.S. workers (that pay income taxes).

    We should learn from successes like Florida’s sales tax cap & mistakes, like the 1990 luxury tax designed to soak the rich that backfired devastating the U.S. marine industry eliminating tens of thousands of U.S. jobs while raising only a few tenths of a million dollars in its first year. Adding salt to the wound the government paid unemployment benefits for the jobs lost.

  5. captA

    Actually,

    I could not care less if the 2nd home mortgage deduction stays or goes. What I do care about is fairness. If the 2nd home mortgage deduction stays, then it should stay for boats. If it goes–then it should go for everyone–All or Nothing. Anything else would not be fair. Quite honestly, if deducting interest on a second home mortgage will determine if someone will purchase a second home or a boat, then they probaby shouldn’t be purchasing said 2nd home or boat in the first place.

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