By John L. Duoba, Toolkit Staff Writer, and John Scorza, CCH Washington Staff Writer
As separate issues before Congress, estate tax reform and a hike in the minimum wage have dubious prospects for passage. The House of Representatives has favored the former, but not the latter. And the Senate has been unable to muster a majority for the minimum wage, although they did cast a 57-41 vote in favor of full estate tax repeal, which was three votes short of a procedural hurdle that would end debate and call for a final vote.
Generally speaking, Republican majorities have scuttled prospects for the minimum wage hike and Democratic minorities have killed the death tax issue, with a small number of lawmakers crossing over the party-line votes. Republicans argue the current estate tax and any raise in the minimum wage would be bad for small businesses, killing national economic growth. Democrats complain that the wage hasn't been increased in nine years and that taxes should be increased, not cut.
With both sides entrenched heading into an election cycle, a compromise may be in the offing, allowing both sides to declare victory and move on.
On July 29, 2006, the House took a step in that direction by passing legislation to raise the minimum wage coupled to provisions to extend several tax measures, including one lowering the estate tax. The wage hike proposal could endanger the the tax reform efforts when the Senate takes up the bill, which is likely sometime during the week of July 31, as the Senate has never garnered more than 47 out of 100 votes for changing the minimum wage.
The House-approved bill would increase the current federal minimum wage rate of $5.15 per hour by $2.10 over three years. The wage would rise to $5.85 an hour on January 1, 2007, $6.55 an hour on June 1, 2008 and $7.25 an hour on June 1, 2009. Under the bill, employers could count tips toward meeting minimum wage increases in states where state laws prohibit tips from being calculated as part of the minimum wage.
The proposed wage hike, long favored by Democrats, could face considerable opposition from the minority party that objects to the estate tax proposal. On the other hand, there's a question as to whether Senate Republicans will choose to delay estate tax reform until some other time, when it's not coupled with a wage hike.
"It's political blackmail to say the only way that minimum wage workers can get a raise is to give tax giveaways to the wealthiest Americans," remarked Sen. Edward Kennedy (D-Mass.).
According to White House Press Secretary Tony Snow, President George W. Bush supports a minimum wage increase if it "does not jeopardize the ability of small businesses to create jobs." "We are waiting to see what Congress comes up with," Snow said at a July 28 press briefing, shortly before the House passed its bill.
Senate Majority Leader Bill Frist (R-Tenn.) warned that a vote on the minimum wage would not occur again this year if the Senate killed the House bill. "It is now or never--this week--and members should understand that. There will be no second chances. No last minute side deals," Frist remarked on August 1.
In the end, lawmakers will have to decide for themselves if getting a policy victory in one area, while at the same time removing an election issue from the opposing party's arsenal, is worthy of a compromise vote. Or will they live to fight another day?
- Related items:
- House Passes Estate Tax Relief Bill, Senate Vote Expected Next
- Full Estate Tax Repeal Dies in Senate; Compromise Reform Under Consideration
- IRS Concedes Defeat on Long Distance Telephone Tax; Refunds To Be Granted
- New Retirement Savings Opportunities in Recent Tax Relief Law
- Congress Extends Tax Relief Provisions with Offsets, Seeks To Reinstate Expired Credits
- New Tax Year Means Many Tax Changes to Consider
Added to the news on August 16, 2006.
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