House GOP Urges $1 Minimum Wage Hike

Tuesday, August 29th 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — Signs of compromise have emerged for a bill to raise the minimum wage by $1 over two years, now that House Speaker Dennis Hastert proposed to move the legislation without two key tax cut proposals that drew objections from President Clinton.

Senior White House officials and Democratic congressional leaders said Monday that Hastert's offer could represent a breakthrough in long-stalled negotiations on size and speed of a minimum wage increase and the composition of an accompanying package of tax breaks for business.

``We will study Speaker Hastert's offer and hope to work with the GOP, which now seems possible for the first time, to produce a bill that is in the best interest of working Americans,'' said House Minority Leader Dick Gephardt, D-Mo.

Hastert, R-Ill., said in a letter to Clinton that Republicans still wanted a $76 billion package of business tax breaks paired with the wage measure. But they would remove proposals to abolish the estate tax and to change pension laws, including increased contribution limits for 401(k) plans. Both are subjects of separate bills moving on their own.

Democrats have long sought in these prosperous economic times to increase the $5.15-an-hour federal minimum wage, but Republicans say tax breaks are needed to cushion the higher costs that would fall on businesses.

``It is very clear that a vast majority of congressional Democrats and Republicans would like to see a balanced approach achieved before we adjourn,'' Hastert said in the letter to Clinton. ``I believe that we can work together to pass this legislation when we return in September with strong bipartisan majorities in the House and Senate.''

According to Clinton administration estimates, about 10 million workers earning between $5.15 and $6.14 an hour would be directly helped by a $1 minimum wage increase. For a full-time worker now earning minimum wage, it would amount to a $2,000 annual raise.

Gene Sperling, the president's chief economic adviser, said the White House would ``take a fresh look'' at the tax package now that ``the most objectionable poison pills'' were removed.

``If this movement reflects a Republican willingness to work with us to remove remaining barriers, then perhaps we can come to a bill the president could sign,'' Sperling said.

Republicans are divided on the merits of increasing the minimum wage, but with House control at stake in the fall elections some want to head off potential Democratic attack ads claiming they favor tax cuts that skew to the wealthy, such as abolishing estate taxes, but have done nothing to give raises to the lowest-paid workers.

Under Hastert's proposal, the minimum wage would rise to $6.15 an hour over two years: 50 cents on Jan. 1 and 50 cents on Jan. 1, 2002. The proposal would provide business tax breaks worth $76 billion over 10 years, down from $122.7 billion in an earlier House version of the bill.

The tax package includes:

—Immediate 100 percent health insurance premium deductibility for the self-employed, sooner than under current law. Individuals could deduct from their taxes 100 percent of health expenses without itemizing, if they are not covered by an employer or government plan or by Medicare.

—Repealing excise taxes on producers and marketers of distilled spirits, wine and beer.

—Raising the business meal deduction from 50 percent to 80 percent; increasing the amount of business equipment eligible for an expensing tax write-off from $19,000 to $35,000; providing tax credits for timber companies' reforestation costs; and restoring a law allowing a business seller to pay taxes in installments rather than requiring a lump sum.

—Extending through 2004 the Work Opportunity Tax Credit, given to employers that hire certain disadvantaged workers.

The speaker's plan would also make changes in several workplace regulations: updating exemptions for computer professionals, changing employer rules for workers who receive tips, equalizing rules for sales people and changing the way overtime is calculated when hourly workers get bonuses or performance incentives.


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