Senate Votes to Increase Taxes on Executive Compensation

Late last week the Senate approved amendments to the House’s proposed Fair Minimum Wage Act of 2007 (Minimum Wage Act) which could dramatically increase taxes on nonqualified deferred compensation and limit corporate tax deductions for many forms of executive compensation.

The Minimum Wage Act, passed by the House on January 10, 2007, would increase the minimum wage to $7.25 over two years. Senate amendments to the Minimum Wage Act provide, among other things, tax incentives intended to reduce the burden of the wage increase on small businesses. The Senate’s amendments include revenue-generating provisions to cover the proposed tax-breaks, two of which would directly impact compensation arrangements as summarized in the full article.