    [Public Papers of the Presidents of the United States: William J. Clinton (1996, Book II)]
    [August 20, 1996]
    [Pages 1317-1318]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Statement on Signing the Small Business Job Protection Act of 1996
    August 20, 1996

        Today I have signed into law H.R. 3448, the ``Small Business Job
    Protection Act of 1996.''
        This is important and long overdue legislation that provides a badly
    needed pay raise for millions of Americans and their families who
    struggle to make ends meet while working at the minimum wage. The Act
    boosts the minimum wage in two steps--a 50 cent increase from $4.25 to
    $4.75 an hour that takes effect October 1, followed by an additional 40
    cent rise to $5.15 an hour on September 1, 1997. This increase will help
    some 10 million of our hardest pressed working families build a better
    future. It is true to the basic American bargain that if you work hard
    you ought to have food on your table and a living wage in your pocket.
    It is the right thing to do.
        I should note that I disagree with certain provisions added to the
    minimum wage title of the Act, such as the provision creating a new
    subminimum wage for young people and the one denying increased cash
    wages to most employees who rely on tips for part of their income.
    Still, those defects do not obscure the central accomplishment of this
    Act--securing the first minimum wage increase since 1991.
        Beyond raising the minimum wage, this Act represents real progress
    on a number of other fronts.
        First, I am particularly gratified by the important provisions in
    this Act concerning adoption. The Act provides a nonrefundable tax
    credit of up to $5,000 per child for adoption expenses; $6,000 for
    children with special needs. It will help thousands of children waiting
    for a family who wants them. It will help thousands of middle class
    parents realize their dream of adopting a child. It will build stronger
    families and stronger communities.
        Moreover, the Act bars placement agencies that receive Federal funds
    from denying or delaying adoptions based on race, color, or national
    origin. As I have consistently said, it is time to end the historical
    bias against interracial adoptions. That bias has too often meant
    interminable delay for children waiting to be matched with parents of
    the same race. It is time to put the creation of strong and loving
    families first.
        Second, the Act creates a simplified, 401(k) retirement plan for
    small businesses, making it far easier for such companies to offer
    pensions to their employees. This new plan includes many of the pension
    reforms my Administration proposed more than a year ago. For example, it
    increases the portability of pensions, allowing more new workers to
    start saving for retirement from their first day on the job. It cuts the
    vesting period for workers in multiemployer plans from 10 years to 5,
    immediately vesting over 1 million workers in their benefits. It repeals
    the so-called ``family aggregation rule,'' which limited the retirement
    benefits of family members working together in the same business. It
    allows nonprofit organizations and Indian tribes to maintain 401(k)
    plans for their workers; assures veterans they will have continued
    pension coverage if they return to a civilian job after military
    service; and makes pension benefits safer and more secure for millions
    of employees of State and local governments. The pension provisions in
    the Act are not perfect--they provide a smaller share of benefits to
    lower and middle wage workers than I proposed. But they are a
    significant step in the right direction.
        Third, the Act gives a boost to small business by increasing the
    amount of capital that small businesses can write off as an expense. I
    proposed a $15,000 increase in 1993 in order to encourage the kind of
    investment that creates new growth and jobs. The Congress passed half of
    what we advocated then and this legislation gives us the other half.
    Although the measure in this Act is phased in more slowly than I

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    proposed, it will still give small businesses a good incentive for
    capital investment.
        Fourth, the Act extends the research tax credit, an important
    measure for a high-tech economy that will retain its competitive edge in
    the 21st century only if we remain committed to innovation and the
    research that underlies it. I wanted the Congress to go further by
    reinstating the research credit retroactively to July 1, 1995, when it
    last expired, and making it permanent. But this extension, through May
    of next year, is an important step forward.
        Fifth, the Act extends a tax incentive for businesses that train and
    educate their employees. That incentive excludes from an employee's
    taxable income as much as $5,250 of educational assistance provided by
    an employer. Such assistance is another key element in maintaining U.S.
    competitiveness because a better trained, better educated work force is
    vital to achieving higher productivity. I regret that the Congress
    failed to make this incentive permanent and that it has eliminated the
    incentive for post-graduate education. But in extending the incentive
    for undergraduate education through May 1997, the Act takes a useful
    step.
        Sixth, by replacing the expiring Targeted Jobs Tax Credit (TJTC)
    with a new Work Opportunity Tax Credit, the Act provides a significant
    incentive for employers to hire people from certain targeted groups most
    in need of jobs, such as high-risk youth. I am pleased to see
    improvements that address many of the concerns raised about
    implementation of the TJTC. For example, the minimum employment period
    required before an employer becomes eligible for the credit will promote
    longer, more meaningful work experiences for those hired.
        As strong a piece of legislation as this is overall, however, I am
    concerned about three provisions, two of which I objected to when they
    were included in legislation I vetoed last year.
        The first provision repeals the tax credit related to corporate
    investments in Puerto Rico and other insular areas. I urged the Congress
    to reform the credit and use the resulting revenue for Puerto Rico's
    social and job training needs. My proposal would have, over time,
    prevented companies from obtaining tax benefits by merely attributing
    income to the islands, but it would have continued to give companies a
    tax credit for wages and local taxes paid and capital investments made
    there, as well as for earnings reinvested in Puerto Rico and qualified
    Caribbean Basin Initiative countries. This legislation ignores the real
    needs of our citizens in Puerto Rico, ending the incentive for new
    investment now and phasing out the incentive for existing investments. I
    remain committed to my proposal for an effective incentive based on real
    economy activity that preserves and creates jobs in underdeveloped
    islands, and I hope that the Congress will act to ensure that the
    incentive for economic activity remains in effect.
        A second provision repeals a 1993 initiative of this Administration
    that reduces tax incentives for U.S. companies to move jobs and
    operations abroad. Repeal of this provision will allow businesses to
    avoid taxes by accumulating foreign earnings without limit.
        Finally, I have reservations about a provision in the Act which
    makes civil damages based on nonphysical injury or illness taxable. Such
    damages are paid to compensate for injury, whether physical or not, and
    are designed to make victims whole, not to enrich them. These damages
    should not be considered a source of taxable income.
        Notwithstanding these objections, this is important, forward-looking
    legislation. It gives millions of hard-pressed workers a well-deserved
    raise, will make adoption a reality for thousands of grateful families
    and children, takes a good first step toward providing adequate
    retirement benefits and security for employees of small businesses, and
    creates useful tax incentives for the benefit of small businesses and
    their employees. Where there are improvements yet to be made, we will
    continue to work with the Congress to make them.

                                                          William J. Clinton

    The White House,

    August 20, 1996.

    Note: H.R. 3448, approved August 20, was assigned Public Law No. 104-
    188.