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Tax break for wealthy is 'poison pill' that kills minimum wage hike

Date Posted: August 18 2006

WASHINGTON D.C. - The U.S. Senate was busy before its summer recess, blocking a bill that tied together a minimum wage hike with providing estate tax relief.

The Senate voted 56-42 to end debate (short of the 60 votes necessary to end cloture and force a vote) on a measure that would have hiked the minimum wage to $7.25 per hour, extend about 20 tax reform measures, and provide estate tax relief that would only affect 8,700 of the wealthiest Americans.

The votes were mostly along party lines, with most Republicans voting to bring the matter to a vote. Democrats were put in the position of essentially voting against a minimum wage hike that they have been pushing for all year, because of Republican insistence on bundling the wage increase with another tax cut for the wealthy. The House has already passed the measure. Republicans have been accused of only bringing up the minimum wage - which Americans favor overwhelmingly in polling - to gain votes in the November congressional election.

AFL-CIO President John Sweeney said the estate tax reduction "is a poison pill that stands in the way of minimum wage workers getting a long overdue pay raise." He said the Senate vote was a message to "stop playing games with the minimum wage." Added Sen. Maria Cantrell, (D-Wash.), who provided a key vote against the measure: "This is a cynical ploy on the part of the Republican leadership in an election year."

Republican Senate Majority Leader Bill Frist switched his vote at the very end in a procedural move that will allow the bill to come up for reconsideration this year, before the Nov. 7 elections. "As I've said before, these issues must be addressed as a package - all or nothing," Frist said. He said both are "vital to the economic security of everyday Americans."

In March, the Republican-led Michigan legislature agreed to raise the state's minimum wage incrementally from $5.15 per hour to $7.40 per hour by July 1, 2008. The election-year vote also staved off a petition effort by the Michigan AFL-CIO that was on its way to hiking the minimum wage and indexing future increases the inflation rate.

An estimated 6.5 million workers nationwide have earned the $5.15 per hour minimum wage since 1997, the last year in which it was increased. The plan in Congress is to phase in wage increases to $7.25 per hour over three years.

"If estate tax repeal is added to the minimum wage increase, there will be no increase for minimum wage workers because the Senate has already rejected the estate tax repeal. That is unlikely to change, and Republican leaders of the House know it," Sweeney said. "The minimum wage increase should not depend on whether billionaires get another tax break."