House GOP aims to link minimum wage increase with tax cut

Thursday, March 9th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) -- With a $1 boost in the minimum wage all but inevitable, House Republicans are aiming to put their stamp on a traditionally Democratic issue by coupling the legislation with a 10-year, $122.7 billion package of tax cuts intended to ease the wage increase's impact on small business.

"There's an understanding that we will have a vote on this wage bill," said Rep. Rick Lazio, R-N.Y. "We're looking for a fair balance."

Disregarding President Clinton's veto threat, the House today planned votes on both the tax cuts and competing proposals to increase the $5.15-an-hour minimum wage: the GOP's increase of $1 over three years and an alternative two-year increase.

Clinton cast the Republican bill as a triumph of special interests over workers. "Once again the Republican leadership has derailed what should be a simple vote on the minimum wage with a maximum of political maneuvering," the president said. "Congress should send me a bill I can sign, not one that I have to veto."

GOP leaders struggled today to line up the necessary votes amid complaints from some Republican conservatives about an amendment that would strip out their provision allowing states the option of implementing the $1 wage increase. But after an hour long meeting with Speaker Dennis Hastert, R-Ill., and other leaders, the conservatives grudgingly agreed they would no longer delay the legislation.

"We have just been asked, indeed we have been implored, to do something that is a serious mistake," said Rep. John Shadegg, R-Ariz. "It is something we are doing out of respect and loyalty to them."

When the smoke clears, GOP leaders hoped to merge the victorious minimum-wage version with the business tax breaks and send the bill to the Senate, which has already approved a $1 increase in the wage and its own package of tax cuts.

Clinton wants a straightforward $1 increase over two years, arguing the tax cuts -- particularly reductions in the estate tax --are tilted toward the wealthy and would eat into projected budget surpluses needed to shore up Social Security and add a Medicare prescription drug benefit.

"If Republican leaders send me a bill that makes workers wait for another year for their full pay raise and holds the minimum wage hostage for risky tax cuts that threaten our prosperity, I'll veto it," Clinton said Wednesday at a White House rally. "It is time to stop nickel-and-diming American working people out of the money they need and deserve."

The minimum wage issue carries strong political overtones for Republicans. Many moderates, particularly in the Northeast where organized labor is strong, have pushed for a vote on an increase to remove an issue Democrats could use against them.

GOP conservatives, meanwhile, oppose the wage increase as a job-killer, but they are happy to vote for the tax cuts. The issue has roiled the House GOP for months, but supporters were confident that eventually workers would get their raise and that tax cuts of some size would become law in this election year.

"This thing has already jumped a lot of hurdles," said Rep.John Shimkus, R-Ill. "We've had a lot of internal and external fights just to get to this point."

Two-thirds of the tax bill's 10-year cost comes from a gradual reduction in the estate tax, which carries a price tag of $78.6 billion. Democrats say this primarily benefits the wealthy, pointing to an analysis by the labor-funded Citizens for Tax Justice concluding that it mainly benefits people with incomes over $319,000.

"We should not be forced to bribe the most wealthy in our society in order to secure a simple dollar more per hour for the poorest working American families," said Rep. Charles Rangel, D-N.Y. But Republicans say the estate tax kills small business and farm growth and imposes burdensome tax planning costs that should be reduced if businesses are forced to pay a higher minimum wage.

"We think that with the minimum wage, we want to cushion the impact on the economy, particularly small business," said Rep. Rob Portman, R-Ohio.

The tax package also would gradually boost 401(k) contribution limits and make other pension changes; make health insurance premiums fully tax deductible for the self-employed sooner than under current law; increase the amount of business meals that can be deducted; and enact other tax breaks for small business.

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The minimum wage bill is H.R. 3081. The tax bill is H.R. 3832.

On the net: Joint Committee on Taxation: http://www.house.gov/jct/tableofcnts.html
http://www.thomas.loc.gov