House cuts death tax and hikes minimum wage

On March 9, by a vote of 257 to 169, the House passed the Small Business Tax Fairness Act (HR 3081), which would cut taxes by $112 billion over ten years. The measure contains a variety of provisions, including reducing the estate and gift ("death") taxes, allowing selfemployed individuals to deduct the entire cost of their health-insurance effective in 2001, and increasing, just-for small business, thb deductibility of business meals to 55% and then 60%. The bill would also extend the welfare-to-work program, create 15 urban and rural "renewal" communities. The measure was then combined with the bill (H.R. 3846) subsequently passed by the House increasing the minimum wage from $5.15 per hour to $6.15 by April 2002 in annual increments.

Bill sponsor Rep. Bill Archer (R.-Tex.), chairman of the Committee on Ways and Means, argued that his measure would help the small-business owners who might be hurt by the hike in the minimum wage. "These Americans are not rich., The average small business owner makes about $40,000 a year, and the average restaurant owner makes about $50,000 a year; but as we have heard already this morning, and it is really a shame, Democrats who want to divide our country are making the same old class-warfare arguments that do nothing to help unite us; do nothing to help recognize the ladder of upward mobility for all Americans and that no one stays fixed in where they are today."

Rep. Charles Rangel (D.-N.Y.), ranking Democrat on the Ways and Means Committee, characterized the combination into one bill of liberal provisions such as the minimum wage hike with what he called GOP tax cuts "for the wealthy" a political trick to get the President to veto popular legislation. "Everything that the people want is going to be taken, whether it is the Patients' Bill of Rights, affordable drugs, and it is going to be said that my colleagues on the other side are for these things and then add on to it substantial tax cuts that is not for the working people but for those who really have the highest earnings and deserve the benefits the least." Rangel drafted an alternative tax bill that would not reduce taxes, but his attempt to replace HR 3081 with his bill was defeated (see House rollcall at left).

Rep Jennifer Dunn (R.-Wash.) pointed out that the death tax hurts small businesses far beyond just the degree to which they eventually pay the tax. Tax lawyers, she said, generate as much revenue from the existence of estate taxes as the government. "The mere existence of the tax forces businesses to spend an average of $67,000 per year in life insurance premiums and attorneys and accountant fees in order to prepare for the tax. The total cost of compliance in the private sector alone is about equal to the total dollars collected in this tax each year. In addition, [the opposition's] argument does not account for the number of businesses who sell before the owner dies in order to pay a lower capital gains tax."

A "yes" vote was a vote for the tax cut directed at small business owners. A "no" vote was a vote against the bill and was in agreement with the President's position.

Copyright Human Events Publishing, Inc. Mar 24, 2000
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