Before adjourning for a five-week summer recess, the House pushed through a bill pairing a minimum wage increase with a GOP-led effort to extend cuts on estate taxes.
The bill, which passed the House by a 230-180 vote, contains the first hike for the country's minimum wage in more than 10 years -- an increase from $5.15 to $7.25 per hour, spread out over the course of three years.
As it stands now, the estate tax will be eliminated entirely by 2010, and then jump back to 55 percent on estates larger than $1 million the following year as part of President Bush's first-term cuts. The House bill would extend reductions in the tax, but stop short of a permanent exemption -- reinstating the tax in 2010 with an exemption of $3.75 million and a top rate of 40 percent. The first $5 million of an individual's estate would be exempted ($10 million for a couple) by 2015 and estates worth up to $25 million would be taxed at capital gains rates. Taxes on larger estates would fall to 30 percent by 2015.
The Senate is expected to take up the legislation next week, though passage is doubtful. Senate Minority Leader Harry Reid, D-Nev., estimating that the total bill would cost more than $300 billion over the next decade, has already said Democrats wouldn't pass the proposal, despite efforts from the party to raise the minimum wage in recent years.
The bill also contains about $38 billion in bipartisan tax breaks set to expire this year, such as a research and development credit for businesses, and deductions for college tuition, and state and local sales taxes.
Previously on WebCPA:
IRS to Thin Ranks of Estate Tax Attorneys (July 25, 2006)
Estate Tax Rollback Gets Life in New Bill (June 21, 2006)
Estate Tax Repeal Won't Get Senate Vote (June 9, 2006)
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