The Rural Patriot

August 1, 2006

The House Raises the Federal Minimum Wage, but at What Cost? (Part 1)

Filed under: Congressional Votes — theruralpatriot @ 4:40 pm

At 1:41 am, July 29, the House of Representatives passed H.R. 5970:

to amend the Internal Revenue Code of 1986 to increase the unified credit against the estate tax to an exclusion equivalent of $5,000,000, to repeal the sunset provision for the estate and generation-skipping taxes, and to extend expiring provisions, and for other purposes

While there are many other provisions/sections to this bill, several notable ones stand out.  This first post on the topic discuss the Minimum Wage Hike implications and the Estate Tax provisions.

The federal minimum wage rate would be raised to $5.85/hour on 1/1/07; $6.55/hour on 1/1/08, and $7.25/hour on 1/1/09. 

However this bill provides a “tip credit provision” that will actually cut wages for workers in seven states that are currently prohibited from utilizing a tip credit (Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington).  The other 43 states follow this rule:  “If an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the minimum hourly wage — $5.15 an hour effective 9/1/97 — the employer must make up the difference.”

If this bill passes the senate and becomes law, workers in the above seven states will lose their right, passed under state law, that demands that the workers are paid the current minimum wage plus tips that are earned.  The House bill provides that employers can pay as little as $2.13/hour.  (They are currently being paid $7.63 an hour in Washington state.)

It was stated during Friday night’s debate of this bill that only 7500 families, or .3% of the population, would be affected by the Estate Tax Provision.  Some call it The Paris Hilton Tax Cut.

Fewer than 1 percent of the people who died in 2004 paid an estate tax, and half the revenue from the tax came from estates valued at $10 million or more.

Counting both revenue losses and added interest costs, complete repeal of the estate tax would cost the government close to $1 trillion between 2012 and 2021, according to the Center on Budget and Policy Priorities.

“18 families worth a total of $185.5 billion have financed and coordinated a 10-year effort to repeal the estate tax, a move that would collectively net them a windfall of $71.6 billion.”

Here are some of these families:  the Waltons (Wal-Mart), Wegmans (Wegmans Food Market, Inc.), Nordstroms (Nordstrom Inc.), Mars (Mars Inc.), Gallos, (E&J Gallo Winery), Dorrances (Campbell Soup Co.),and the DeVos and Van Andel Families (Alticor/Amway)

They have stayed “behind the curtain” in their efforts regarding this estate tax cut; but make no mistake, they have been active for a number of years in their efforts.

In a massive public relations campaign, the families have also misled the country by giving the mistaken impression that the estate tax affects most Americans. In particular, they have used small businesses and family farms as poster children for repeal, saying that the estate tax destroys both of these groups. But just more than one-fourth of one percent of all estates will owe any estate taxes in 2006. And the American Farm Bureau, a member of the anti-estate tax coalition, was unable when asked by The New York Times to cite a single example of a family being forced to sell its farm because of estate tax liability.

Said Lee Farris, senior organizer for estate tax policy at UFE, “It’s time for the majority of Americans who support the estate tax to speak out, and not let a handful of wealthy families sway Congress to twist the tax laws for their own benefit. Polls now show that most Americans support this tax and the revenue it yields to pay for vital services, especially given our nation’s huge deficit.”

The Emergency Campaign for America’s Priorities released a poll finding that 57 percent favored reform or leaving it alone, and 23 percent backed repealing it.

But, there are other wealthy individuals who have not joined in and have defended the current structure:

“The estate tax should be regarded as just paying back to the country for all the wonderful things it’s made possible for the people who have that wealth,” said Bill Gates Sr. in an audio statement played at the press conference. “I don’t think there’s any great societal goal being served by inherited wealth. And certainly there’s no sensible argument that I can think of for insisting on being able to pass the last penny of $100 million on to your three kids.”

Paul Newman, actor and founder of Newman’s Own food company, agreed in a separate statement: “For those of us lucky enough to be born in this country and to have flourished here, the estate tax is a reasonable and appropriate way to return something to the common good. I’m proud to be among those supporting preservation of this tax, which is one of the fairest taxes we have.”

This bill, of course, will be promoted as “Republican House members vote to raise the Federal Minimum Wage”.  How many of them will just as loudly promote these tax cuts and other provisions of the bill?  How many of them would have voted “yes” if it were a straight up-or-down vote based solely on the wage issue?  How many of them changed their mind from  “no to yes” after these numerous provisions were added?

[And how many of them have said “Thank You” to their wealthy contributors by voting “yes”?]

EDITOR NOTE:  There is another provision of this bill that residents of NY-29 may find interesting; one that our congressman, Randy Kuhl, co-sponsored.  He is one of only two that co-sponsored, and it made its way into the bill.  I am devoting a separate post, Part 2, regarding this provision.  It will be up later this evening.  Stay tuned.



  1. How come your write such great comment. can we share a peice of it. i am copyign a little bit out of this and keeping it for my reference in future.

    Comment by Check Cash Advance — September 22, 2006 @ 3:43 pm | Reply

  2. I am glad that you found this post useful. Good writing takes research, and the internet is a valuable tool in the endeavor. Thanks for your comment, and help yourself with the sharing. All I ask is that if you use something specific that I wrote, please link the referring post in your writing.

    Comment by theruralpatriot — September 22, 2006 @ 8:41 pm | Reply

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