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Washington Watch: Help for poor tied to tax cuts for the richest September 7, 2006 The UFT Hispanic Affairs Committee Editor's note: One in a series of analyses of national issues from workers' point of view. Senate Democrats stalled a bill to raise the federal minimum wage to $7.25 and labor leaders couldn't be happier. The bill would have tied raises for the working poor with multi-million dollar tax cuts for the wealthiest Americans. Some workers would have actually seen a decrease in their wages. "Millions of working families need and deserve a pay raise," said NYSUT Executive Vice President Alan Lubin. "Nearly 10 years is far too long to have to wait for an increase." House Republicans passed the bill in late July, but it was rejected in the Senate. The Estate Tax and Extension of Tax Relief Act of 2006 would have increased the federal minimum wage $2.10 over three years. However, for the first time in history, the bill would have set a ceiling for minimum wage levels for employees who receive tips. The nonpartisan Economic Policy Institute reports that in at least seven states the bill would have stripped up to $5.50 per hour in wages from employees who receive tips. The bill, setting the federal minimum wage for tipped employees at $2.13 and relying on customer tips to make up the remainder, would have eliminated minimum wage laws in states where workers are guaranteed a minimum wage, regardless of their tip income. In an example provided by the EPI, a worker in Washington who makes $7.63 per hour plus tips would see his or her salary drop to the federal minimum of $2.13 plus tips. More troubling for labor leaders was the bill's multi-million dollar giveaway to the country's wealthiest individuals at the expense of the working poor. The bill sought to raise the estate-and-gift tax exemption to $5 million for an individual, and $10 million for a couple. Under current legislation, the estate tax will be permanently repealed in 2010 but re-enacted in 2011. "The Republican estate tax bill would blow a $753 billion hole in the federal budget," said AFL-CIO President John Sweeney. "Working people will have to pay that price one way or another." If those costs are paid for with budget cuts to programs such as Medicare, Medicaid, food stamps, veterans programs and unemployment insurance, Sweeney said, the estate tax bill would hurt the people that a minimum wage increase is supposed to help. Lubin agreed. "We exposed and defeated this sham attempt to fill the pockets of the super-rich even further. But our work isn't done," Lubin said. "Using poor families as a pawn is just shameful. Working people have waited long enough." The bill could resurface as early as this month for a revote in the Senate. |
* Since the last minimum wage increase, congressional leaders have given themselves nine pay raises totaling about $31,600 per member per year - three times a minimum wage worker's total annual salary. * In 2003, workers paid an average of $2,283 annually for employment-based family health insurance. A worker earning the $5.15 hourly federal minimum wage earns $10,712 annually. * At the current federal rate, a minimum wage worker has to work more than 11 hours to pay for one tank of gas. Source: www.aflcio.org
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