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LISA NAPOLI: The Senate Finance committee will consider a bill that would give small businesses billions of dollars worth of tax breaks. Nancy Marshall Genzer explains.
NANCY MARSHALL GENZER: The idea behind the Senate tax breaks is to cushion the blow of a higher minimum wage so that small businesses don't lay off their low-skilled workers.
David Neumark is a professor of economics at University of California, Irvine.
DAVID NEUMARK: The burden of minimum wage increases on the business side will fall on small businesses to some extent, and therefore you throw them a bone to make them a little less unhappy about all this.
That bone is about $8 billion worth of tax breaks — enough to make me pretty happy. But Neumark says the tax breaks just muddy the waters, because they're not designed specifically to prevent layoffs.
NEUMARK: One can subsidize wages, one can have hiring credits. We've experimented with those things in the past and they're not easy to get right.
But businesses like tax breaks, so good economics may have to take a back seat to good politics.
In Washington, I'm Nancy Marshall Genzer for Marketplace.