Republican Senators were frustrated once more this week in their attempts to see levels of taxation reduced. GOP lawmakers had bundled the cuts with a proposed increase in the federal minimum wage in an attempt to engender Democrat support; however, the bill failed Thursday in a Senate vote. Despite this setback, GOP representatives have promised that the bill will be voted on once more in September.
The bill sought to introduce — and reintroduce — a number of tax cuts, most prominently with regards to estate and inheritance. In accordance with President Bush’s first tax cuts in 2001, the estate tax has shrunk over the last six years and will reach its lowest level in 2010; however, in 2011 it will be reintroduced at pre-2001 levels. This bill sought to continue this policy, increasing the estate value exempt from taxation to $5 million for individuals and $10 million for couples and continue the lower rates on higher-valued estates.
Many of the cuts involved tempting, pork-barrel, industry-specific cuts aimed at specific, individual Senators — particularly Democrats. Included were cuts on timber taxation, a tempting prospect for Sen. Maria Cantwell (D-Wash.); also included were tax breaks for coal-mining corporations, equally tempting for Sen. Robert Byrd (D-W. Va.).
As well as attracting Democratic Senators with tax cuts they would support, in bundling these cuts with a minimum wage increase Republicans also sought to divide Democrats over a popular issue — and one that will be of increasing importance in the build-up to mid-term elections this fall. Democratic campaigns have increasingly focused on increasing the minimum wage, and Republican senators hoped that this bill would propose a dilemma for Democratic senators, who must either support a minimum wage increase — and with it the decrease in taxation they had opposed — or risk being seen to be inconsistent and indecisive over the issue.
These attempts were met with strong criticism from many Democratic Senators, with Sen. Edward Kennedy (D-Mass.) calling Republican tactics “cynical,” “contemptible” and “cowardly.” As the San Francisco Chronicle reports, Californian Democrats also claimed that the bill’s measures would slash the incomes of up to 650,000 Californians who rely on tips to supplement their incomes. Many other Democrats pointed out that the loss in tax income would cost the federal treasury an estimated $753 billion over 10 years.
Equally strong, however, was the criticism from many Republican senators, many of whom accused Democratics of blocking the bill for purely political reasons. Sen. Mitch McConnell (R-Ky.) decried what he saw as Democratic attempts to paint a picture of a “do-nothing Congress,” claiming that Democrats sought to “block and blame” — to resist legislation and portray the resulting failure as Republican weakness.
Republicans chose to package their tax cuts with a minimum wage increase after earlier attempts to see the cuts implemented failed; whilst this bill did succeed in seeing debate, many Republicans resisted what they saw as a risky strategy. Sen. Charles Grassley (R-Iowa) was particularly critical of the strategy, likening it to “[betting] on the wrong horses.” A second vote on the bill is expected to occur after Congress reconvenes in September.