WASHINGTON – Republicans muscled the first minimum wage increase in a decade through the House of Representatives early Saturday 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, Republican leaders saw combining the wage and tax issues as their best chance for getting permanent cuts to the estate tax, a top Republican priority fueled by intense lobbying by farmers, small business owners and super-wealthy families such as the Waltons, heirs to the Wal-Mart fortune.
"This is the best shot we've got; we're going to take it," said House Majority Leader John Boehner, a Republican. The unusual packaging also soothed conservatives angry about raising the minimum wage over opposition by Republican business allies.
The House passed the bill 230-180 before leaving for a five-week recess.
Senate Minority Leader Harry Reid vowed Democrats would kill the hybrid bill, along with its 10-year, $300 billion-plus cost.
"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."
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 Republican package would increase the wage from $5.15 (euro4.05) to $7.25 (euro5.70) 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 (euro790,000 million) in 2011.
The bill passed Saturday would exempt $5 million (euro4 million) of an individual's estate, and $10 million (euro8 million) of a couple's, from estate taxes by 2015. Estates worth up to $25 million (euro20 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 minimum wage increase 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, a Democrat.