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ESTATE TAX REFORM LINKED TO MINIMUM WAGE HIKE

July 31, 2006

Maybe if everyone hates it enough, it will pass. That seems to be the logic behind the newest strategy to pass estate tax reform.

In a flurry of last-minute legislative duct-taping, the proposal to reduce the top estate tax rate to 30%, with a $5 million exemption, has been tied to an increase in the minimum wage and the "expiring provisions" extenders in hopes of getting 60 votes.

Most Republicans despise increases in the minimum wage, and most Democrats want the estate tax rates to stay high. By tying these two bitter pills together, and to the widely popular (if ill-advised) expiring provisions, Republicans hope to be able to get the 60 Senate votes they need.

Will they? Tax Analysts ($link) quotes a "legislative aide" as being confident of getting 60 votes for this "Trifecta" package. The Washington Post (hat tip: The Tax Prof) quotes Senate Democratic leaders as vowing to block the bill.

The expiring provisions include, among others:

- the deduction for state and local sales taxes;

- the expanded version of the research credit;

- the above-the-line deduction for qualified higher education expenses;

- the above-the-line deduction for teachers' classroom expenses;

- the work opportunity tax credit and the welfare-to-work tax credit.

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