Arkansas News


Pryor, Lincoln undecided on estate tax cut, minimum wage hike

WASHINGTON – With Democrats and Republicans courting their possibly pivotal votes, Arkansas senators Wednesday said they were unsure if they would support a bill to both raise the minimum wage and reduce the estate tax.

Sens. Blanche Lincoln and Mark Pryor, both Democrats, are seen as swing votes that could buck party consensus and vote for the Republican-backed tax cut and wage hike. The bill also would extend a number of popular tax cuts for businesses and families.

The Republican leadership is attempting to woo Pryor by including a provision in the bill for rural development bonds. Another part of the bill that would cut a timber industry tax was made to appeal to Lincoln.

Lincoln said Wednesday that there is merit to the legislation.

“There seems to be some good things in it that we’ve supported in the past, but I really haven’t made a decision,” she said. “I think the bill before us in terms of its reform efforts are reasonable. There are things I would have done differently, but if there’s one thing you learn up here, it’s that you can’t get 100 percent of what you want.”

The bill hikes the federal minimum wage from $5.15 to $7.35 per hour over three years. It exempts estates of up to $3.75 million per individual from inheritance taxes, effective in 2010. The exemption increases to $5 million by 2015.

House leaders combined the two items and the House approved the measure just before adjourning for its August recess last weekend. The Senate is set to recess Friday, but Senate Majority Leader Bill Frist has said he would delay the recess start if necessary.

Frist, R-Tenn., needs 60 votes to end debate and bring the bill up for a vote. There are 55 Republicans in the 100-member Senate.

A vote on whether to close debate is expected Friday.

In June, Lincoln was one of 57 senators – three short of the total needed – who voted to end debate on an estate tax measure. Pryor voted with the majority of his party against the procedural move.

Pryor said his vote on the latest estate tax measure will depend on whether he thinks it hurts the federal budget too much. He predicted a “fiscal train wreck” ahead.

Opponents decry the estate tax proposal as a benefit for only 8,100 Americans at a cost of close to $800 billion a year.

“We’re running a $300 billion-plus annual deficit. I’m afraid this estate tax will add 20 to 30 billion overnight,” Pryor said. “I’m looking at that and weighing that.”

Democratic leaders Wednesday vowed to kill the permanent estate tax cut, while promising a minimum wage hike this year. Congress last increased the minimum wage a decade ago.

Senate Democratic Whip Richard Durbin, D-Ill., did not provide specifics about how Democrats were attempting to keep Lincoln and Pryor in the fold.

“We’re talking to them about how important this issue is,” Durbin said.

Lincoln said the importance, to her, echoes in her home state, where the state Legislature just adopted a $1.10-per-hour minimum wage hike and farmers and small business owners are pleading for estate tax reform.

“I think there’s a good bit of positive and progressive things that have been brought forward here,” she said. “I’d hate to see us lose the opportunity to make them happen.”

She said the estate tax cut gives more certainty to business owners who must save money to pay for the tax.

Without action on the tax, estates of more than $1 million would be taxed at a 55 percent rate starting in 2011.

“I support estate tax reform,” Pryor said. “I think the $1 million exemption and 55 percent rate is bad public policy and is bad for Arkansas.”

Pryor said he plans to introduce a compromise estate tax measure that would temper his concerns about the Republican bill with what he sees as a need for reform.

Both he and Lincoln criticized how the legislation is packaged.

“I don’t like that kind of legislating,” he said. “I would much rather have separate votes on these types of things … I’m not really crazy about the process here.”

He said the Senate should be given a chance to debate the estate tax solely, without the minimum wage and other tax cut extensions attached.

“Certainly you can always throw unpopular legislation with popular legislation and try to get it passed,” he said.

Lincoln said both Democrats and Republicans are frustrated by how things are handled by GOP leaders.

“I think the process has been extremely unfortunate,” she said. ” … Nobody wants to bring about a common sense compromise. They just want to win, and that’s very frustrating.”

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