Home > Take Action > Action Alert - 8/03/06

Just before leaving for summer recess, the House passed H.R. 5970, The Estate Tax and Extension of Tax Relief Act of 2006, by a vote of 230 to 180. The bill makes drastic cuts in the estate tax, extends many tax cuts due to expire, and raises the minimum wage to $7.25 over 3 years.

Estate Tax vs. Minimum Wage:

H.R. 5970’s estate tax cuts will benefit 8,200 families, who will get $1.4 million each in tax cuts, on average, in 2011(The Urban Institute-Brookings Institution Tax Policy Center). According to the Economic Policy Institute, the minimum wage increase when fully implemented in 2009, would affect some 6.6 million employees with an average annual dollar benefit of $1,200 each. EPI also estimates that an additional 8.3 million workers close to the minimum wage may also indirectly benefit.

Action Needed:

The Senate will take up this bill on Friday, August 4 th just prior to adjournment. Because it is laden down with popular tax provisions and other “sweeteners” important to various states, Senators will be under intense pressure to vote in favor of the legislation.

Updated Target Senators:

Call Your Senators Toll-Free*, 800-459-1887 and tell them:

Background on H.R. 5970:

House members are claiming credit for a vote to increase the minimum wage (phased in over three years rather than two), while billions of dollars are spent by gutting the estate tax. The Federal minimum wage has not seen an increase since 1997. During that same period Congress has given itself a raise nine times to the tune of $31,600. Also buried in the minimum wage section is a provision that would weaken some states’ protection of tip-earning workers, lowering wages for many workers. Under current federal law, employers can pay tipped employees as little as $2.13 an hour in a direct wage, with tips getting workers the rest of the way to the minimum wage (or the employer must pay the difference if tips are not sufficient).  However, seven states require employers to directly pay tipped employees $5.15/hour (current minimum wage) or higher (if the state’s minimum wage is higher), just like other employees.  H.R. 5970 would preclude states from adopting these protections for tipped employees.  The states affected are Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington, plus Guam. 

* The toll-free number is provided courtesy of the American Friends Service Committee, a Quaker organization whose work for social justice, peace, and humanitarian service includes campaigns for a moral budget and a fair minimum wage (www.afsc.org/economic-justice/ ).  AFSC welcomes groups to circulate and use the toll-free number in support of non-partisan budget goals and without linking the alert to a website soliciting donations or actions which may be used to support partisan lobbying or work.

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