GOP leaders try to couple minimum wage increase with estate tax cut
WASHINGTON – Republican leaders were confident late Friday that they can push through the House the first minimum wage increase in a decade, along with a cut in inheritance taxes on multimillion-dollar estates.But combining the two volatile issues was sure to cause problems in the Senate, where the minimum wage initiative was likely to die. A post-midnight vote was expected.Still, Republicans saw combining the wage and tax issues as their best chance for getting a permanent cuts to the estate tax, which produced powerful lobbying by farmers and small businessmen – and super-wealthy families such as the Walton family, heirs of the Wal-Mart fortune.”This is the best shot we’ve got; we’re going to take it,” said House Majority Leader John Boehner, R-Ohio. He predicted a comfortable victory.Senate Minority Leader Harry Reid, D-Nev., however, pledged to kill the hybrid bill and its $300 billion-plus cost if it got to the Senate.”The Senate has rejected fiscally irresponsible estate tax giveaways before and will reject them again,” Reid said. “Blackmailing working families will not change that outcome.”The move also put Democrats in the uncomfortable position of voting against the minimum wage increase and the estate tax cut – and an accompanying bipartisan package of popular tax breaks, including a research and development credit for businesses and deductions for college tuition and state sales taxes.But there was GOP discontent, too. Some conservatives in the House were unhappy about the minimum wage vote, while moderates in the party were restive about its being tied to cuts in the estate tax.The GOP package would increase the wage from $5.15 to $7.25 per hour, phased in over the next three years.It would also exempt $5 million of an individual’s estate, and $10 million of a couple’s, from estate taxes by 2015. Estates worth up to $25 million would be taxed at capital gains rates, currently 15 percent and scheduled to rise to 20 percent. Tax rates on the remainder of larger estates would fall to 30 percent by 2015.The maneuver was aimed at defusing the wage hike as a campaign issue for Democrats while using the popularity of the increase to achieve the Republican Party’s longtime goal of permanently cutting estate taxes.That left Democrats fuming.”Just think of what it is to have a bill that says to minimum wage workers, ‘We’ll raise your minimum wage, but only if we can give an estate tax cut to the 7,500 wealthiest families in America,”‘ said Minority Leader Nancy Pelosi, D-Calif., as debate opened.Besides the 10-year, $268 billion cut to the estate tax, the measure contains $38 billion in other tax cuts that enjoy widespread backing, such as the research-and-development tax credit.As part of the plan, the House and Senate would also pass a bill shoring up the U.S. pension system. That bill seemed more likely to succeed than the minimum wage-estate tax plan.Senate Majority Leader Bill Frist, R-Tenn., was a driving force behind the plan, overruling Finance Committee Chairman Charles Grassley, R-Iowa, who wanted to couple the business tax breaks with a bill to overhaul U.S. pension laws.”He is looking forward to bringing to the floor two bills that will strengthen pension funding rules, help to bring sanity to the tax code and offer a first step toward full repeal of the unfair death tax,” said Frist spokeswoman Carolyn Weyforth.Democrats expressed outrage at the GOP strategy, saying low-income workers deserved a straight vote on increasing the minimum wage uncoupled to other measures.The No. 2 Democrat in the House, Steny Hoyer of Maryland, said the move by GOP leaders – who actually oppose the minimum wage increase – was a cynical exercise to give political cover to GOP moderates while ensuring the wage increase does not become law.”They want on the one hand to appear to be doing something and on the other make sure that it doesn’t happen,” Hoyer said.Republicans countered that it was only fair to business interests opposed to the wage to reward them with estate tax relief and other tax cuts. And they said adding the estate tax was the only way to get their Senate GOP counterparts – who rejected a minimum wage hike just last month.”The Republicans in the Senate have twice defeated this,” said Steve LaTourette, R-Ohio. “You know what? If the Senate wants the estate tax and the (tax cut) extenders, they’ve to give us the minimum wage. That’s how it’s going to become law.”LaTourette organized a drive by almost 50 rank-and-file Republican lawmakers to convince House leaders to schedule the measure for debate. Democrats have been hammering away on the minimum wage issue and have public opinion behind themIt was during the campaign year of 1996 that Congress last voted to increase the minimum wage. A person working 40 hours per week at minimum wage makes $10,700, which is below the poverty line for workers with families.Democrats have made increasing the wage a pillar of their campaign platform and are pushing to raise it to $7.25 per hour over two years. In June, the Republican-controlled Senate refused to raise the minimum wage, rejecting a proposal from Democrats.Inflation has eroded the minimum wage’s buying power to the lowest level in about 50 years. Lawmakers have won cost-of-living wage increases totaling about $35,000 for themselves over the last 10 years.Lawmakers fear being pounded with 30-second campaign ads over the August recess that would tie Congress’ upcoming $3,300 pay increase with Republicans’ refusal to raise the minimum wage.