WASHINGTON – Republicans muscled the first minimum wage increase in a decade through the House early today after pairing it with a cut in inheritance taxes on multimillion-dollar estates.
Combining the two issues provoked protests from Democrats and was sure to cause problems in the Senate, where the minimum wage initiative was likely to die at the hands of Democrats opposed to the costly estate tax cuts. The Senate is expected to take up the legislation next week.
Still, GOP leaders saw combining the wage and tax issues as their best chance for getting permanent cuts to the estate tax, a top GOP priority fueled by intense lobbying by farmers, small business owners and super-wealthy families such as the Waltons, heirs to the Wal-Mart fortune.
The House passed the bill 230-180 before leaving for a five-week recess.
Senate Minority Leader Harry Reid, D-Nev., vowed Democrats would kill the hybrid bill, along with its 10-year, $300 billion-plus cost.
Republicans countered that Democrats opposed the bill to keep the issue alive for the November elections.
But Republicans also reveled in putting moderate Democrats in the uncomfortable position of voting against both 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.
The GOP package would increase the wage from $5.15 to $7.25 per hour, phased in over the next three years.
Under current law, the estate tax is phased out completely by 2010, but jumps back to 55 percent on estates larger than $1 million in 2011.
The bill that passed early today would 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.
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