Saturday, August 05, 2006

How the Game is Played

On Thursday, August 3, a bill, already approved by the House of Representatives, went up to a vote by their counterparts in the U.S. Senate. The bill included a phased-in increase of the federal minimum wage, which, after three years, would see the minimum wage rise from $5.15 an hour to $7.25.

A Republican-controlled Senate needed 60 votes to pass the bill. The Senate voted 56-42 against, leaving us with the unlikely situation in which Democratic members of the U.S. Senate are, on the surface, responsible for keeping the minimum wage laughably low. Has Hell frozen over? Was that a pig I just saw flying past my window? Did the Cincinnati Bengals just win the Super Bowl?

Hell is still hot, they tell me. That was a pigeon (with a weight problem) I caught out of the corner of my eye. And the Bengals aren’t winning the Super Bowl in this or any other century. It was actually just business as usual in our nation’s capital. Six Senators in total crossed the aisles, 4 Democrats voted for it and 2 Republicans voted against it. Otherwise, it was just another example of pre-election electioneering.

You see, the bill didn’t just call for a show of hands as to who thought the minimum wage should be increased. (If it had, the bill still wouldn’t have passed, but at least we’d all be a little less confused as to why.) It actually combined a reduction in the estate tax (and the revival of other tax cuts) with the proposed minimum wage increase. For what it’s worth, the AFL-CIO also opposed the bill.

This was a double-edged GOP strategy, and a pretty shrewd one at that. An earlier attempt at bringing the estate tax issue up for debate fell a mere three votes short. So, they linked the proposed estate tax reduction to the proposed minimum wage increase. Even if Democrats succeeded in blocking the bill’s passage, the Republicans could claim that it was the Democratic minority that was responsible for yet another stalled piece of legislation. On a sports discussion board I frequent, Republicans were already asking Democrats to explain why “their” party was against increasing the minimum wage. Oh, boy.

I am not arguing that Democrats have never been guilty of the same type of maneuvering. Filibusters, shutdowns, hey, it all comes with the territory. It’s why politics is the dirtiest game going (though cycling made a strong push during and after this year’s Tour de France)
I shed no tears over the fact that this bill died on the vine. Under the proposed bill, by 2015, the amount of an estate exempt from taxation would have been increased to $5 million for individuals and $10 million for couples. Estates less than or equal to $25 million would have been taxed at capital gains rates (currently 15% and scheduled to increase to 20%). The top tax rate on larger estates would have fallen to 30% (again by 2015).

Don’t get me wrong, I think the minimum wage is long overdue for an increase. I just do not believe that increase is worth it when inextricably linked to yet more tax breaks for those least in need of them. A reduction in the estate tax will arguably lead to cuts in federal programs for the poor due to reduced federal revenue.

The “double taxation” argument against the estate tax has never made any sense to me. You’d be hard-pressed to find a legal transfer of funds that doesn’t constitute “multiple taxation.” My employer has paid taxes on the money that has gone into every paycheck I’ve received. If I don’t get relief from this “double taxation” why should the scion of a wealthy family be exempt from it for money he hasn’t worked for?

Let me put it this way. If I win the lottery, I will gladly pay taxes on my winnings. Likewise, if I inherit an estate large enough to qualify, I will gladly pay estate taxes. In neither instance am I somehow deserving of a tax-free windfall.
The games people play. . .



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