[Weekly Compilation of Presidential Documents Volume 32, Number 34 (Monday, August 26, 1996)]
[Pages 1475-1477]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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.

[[Page 1476]]

    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 
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

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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.