Frist Links Wage Hike to Estate Tax Cut

The Associated Press
Tuesday, August 1, 2006; 8:56 PM

WASHINGTON -- The only opportunity this year to increase the minimum wage and renew popular tax breaks will be linked to a reduction in the estate tax, Senate Majority Leader Bill Frist, R-Tenn., said Tuesday.

The Republican leader said he would schedule a Friday vote to see whether a bill combining the three items, already passed by the House, can win the support of 60 senators. Without that backing, the bill slides off the Senate's agenda.

"It's now or never," Frist said.

Sen. Harry Reid of Nevada, the Democratic leader, criticized the GOP's "take it or leave it" approach.

"The only road to legislative heaven in this Republican-dominated Congress is to repeal the estate tax," he said.

It's a major political battle for both parties as they head toward an election with control of Congress at stake. Republicans hope to neutralize one of the Democrat's biggest issues, the minimum wage, while scoring a victory on one of their own, the estate tax.

The bill links a $2.10 increase in the $5.15 hourly federal minimum wage, phased in over three years, with a reduction of estate taxes. It would exempt $5 million of an individual's estate and $10 million of a couple's from taxation by 2015. Over the same time, the top estate tax rate would fall from 46 percent this year to 30 percent.

Carried along in the package are a host of popular tax breaks that expired last year. They include a research and development credit for business, along with deductions for college tuition, state sales taxes and classroom supplies purchased by teachers.

Democratic leaders said they plan to fight the bill, criticizing the GOP for helping minimum wage workers only to deliver a tax cut to the wealthiest taxpayers. They also criticized the bill for overriding state laws and forcing all states to count tips toward an employee's minimum wage.

Sen. Richard Durbin, D-Ill., said voters will understand their opposition.

"People know for nine years the Republicans have said 'no' to increases in the minimum wage," he said.

The last time Frist tested the Senate's temperament toward reducing or eliminating the estate tax, he fell three votes short and could not bring the issue up for debate.

Senate Finance Committee Charles Grassley, R-Iowa, told reporters the vote count might not have changed much. "I don't know where to get three more Democratic votes," he said. "Will we get them? I don't know. People say it's very chancy."

Some individual senators whose votes may be pivotal remained undecided.

Democratic Sen. Mark Pryor said he needed to know more about the bill's effect on Arkansas. "I don't know the answer to that just yet," he said.

© 2006 The Associated Press