News from the Tennessee Valley Opinion
MONDAY, JULY 31, 2006


Raise minimum wage first, then worry about estate tax

The U.S. House of Representatives has an odd concept of equal opportunity: giving the wealthy a big tax break to balance out an overdue wage increase for the poorest Americans.

The House voted 279-131 early Saturday to slash the estate tax while raising the minimum wage. The bill goes to the Senate, where its prospects of passage are not especially good.

The only balance achieved by the House bill is political: Democrats are pushing for the wage increase, while estate tax repeal is dear to many Republicans (although this legislation would not go that far). Republicans are hoping Senate Demo-crats will hold their noses and accept the package.

There is apparently no financial balance in the bill — no way to recoup the 10-year, $268 billion cost of cutting the estate tax. Nor is there any moral equivalency.

The minimum wage needs to be raised, and the estate tax needs to be adjusted. But the two issues should not be linked.

Raising the minimum wage is more important. The current minimum of $5.15 has not gone up in almost nine years. During that time, its purchasing power has gone down by about 20 percent.

Adjusted for inflation, the minimum wage is at its lowest level since 1955, according to the independent Center on Budget and Policy Priorities. Try supporting a family on $5.15 an hour.

The current estate-tax law is on an absurd trajectory. Unless the law changes, the estate tax will be phased out entirely by 2010, but in 2011 it will jump back to 55 percent on estates larger than $1 million.

The law should be changed in order to be fair to heirs and to avoid undesirable consequences such as the sale of family businesses simply to avoid estate tax. But reform should not shift the cost of government to people who are less well off than those fortunate enough to have to worry about the estate tax.

Congress should raise the minimum wage, then debate the estate tax.

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