NEW YORK (CNNMoney.com) -- In a 360-45 vote, the House on Friday passed a $1.4 billion package of small-business tax cuts, which is expected to ease the passage of a federal minimum-wage increase in the Senate.
The bill is separate from legislation passed by the House in January that would increase the minimum wage. The House tax package passed on Friday and the Senate minimum wage bill passed this month both offer similar tax breaks, including incentives to hire employees who otherwise face barriers in getting work and increasing how much may be expensed for capital improvements.
The biggest difference between the bills is in their scale. The Senate bill offers $8.3 billion in tax breaks for small business and its offsets make permanent tax changes for large businesses.
Leaders in the House and Senate will now have to work together on a compromise that is agreeable both to Democrats, who originally preferred a "clean" minimum wage bill, and to Senate Republicans, who have said that tax breaks for small businesses were needed to ensure passage of a minimum- wage increase.
"The Senate has a higher bar to clear in terms of what is needed to pass the bill. It's pretty clear tax breaks are necessary for passage," said Anne Mathias of the Stanford Washington Research Group.
She noted that it will be easier to get the bill through the House on a party-line vote because only a simple majority is needed. The Senate, however, needs 60 votes just to end debate on the issue and proceed to a final vote. "The Senate [requires] more intraparty compromise," Mathias said.
How exactly the negotiations between the House and Senate leaders play out is still an open question.
Marc Freedman, of the U.S. Chamber of Commerce, says both sides will try to avoid a full conference committee because it's the most time-consuming option.
"Conferences are typically the least attractive approach," Freedman said.
In the end, the House and Senate must pass bills with the same language in order for a bill to be sent to the White House for the President's signature. President Bush has said he favors small-business tax breaks to be passed in conjunction with a minimum-wage increase.
The more extensive tax breaks proposed by the Senate's minimum-wage bill include revenue raisers that pay for the tax breaks by closing loopholes on corporate taxes.
Both the House and Senate bills provide for a gradual increase of the minimum wage from $5.15 an hour to $7.25 an hour over two years. The last time lawmakers increased the federal minimum wage was in 1997.
A minimum-wage hike would directly affect 6.6 million workers currently earning minimum wage, according to the labor-backed Economic Policy Institute.
The hike also could increase the wages of another 8.3 million workers who earn just above the federal minimum. Currently, 28 states and Washington, D.C. already have a higher minimum wage. And a number of those states have indexed their minimum wage to inflation.
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Senate passes minimum-wage, tax break bill
Minimum wage, marginal impact 
