Centerfield

Maybe I'm dense. Why would this dent Kennedy's stunt?

Are we talking about a permanent indexing of the min wage to some gauge?

Even if yes, it will still be effective to suggest that congressional pay shouldn't rise any more quickly than the pay of those Americans who are most poorly compensated.

And it wouldn't matter if my state senator were 1 million times the easily cartooned anachronstic pig that he is. That such a position is held because of its value as a political stunt speaks not at all to the merits of the point being made.

Brian,

Maybe I am misunderstanding Kennedy's stunt. I believe he is calling for a minimum wage increase this session, not for the long term, or no Congressional pay wage this session, again not for the long term. I suppose all it really does is blunt his stunt this time around. He obviously will use it again when he can.

That such a position is held because of its value as a political stunt speaks not at all to the merits of the point being made.

I agree, I think.

Well, at least you admit that you want to screw low-skilled workers in other states to prop up your state's economy.

Oh come on, Josh! At least explain why raising the minimum wage screws low-wage workers. I am assuming you mean the argument that says some of them will lose their job or have less hours to work because of higher labor costs, which I think is more of an ideological rather than reality based argument. I am nervous over any unreasonable raise to the minimum wage, but you can't pass of a one sentence slam like that without explaining what you mean.

I heard somewhere that there is a direct, provable link between minimum wage and economic growth. No-one claimed it was a 1 for 1 relationship, but that it was provable, whereas tax cuts affects on economic growth were not provable. I have not seen any evidence either way, I just raise this as a potential topic of conversation.

I read that the GOP will tie this to elimination of parts of the Estate Tax. Conjecture is that the Dems will fight it, so the GOP wins either way. They can claim the Dems voted against a minimum wage increase, taking away a solid winning campaign issue for the Dems. if it makes it through, they can tell their core constituency that they get to keep more of their cash.

How this affects Kennedy's thing, I can't say. On the surface, he's right. If the cost of living is so hard for a congresscritter that they need pay raises every 24 months or so, than how is it that the lowest wage earners in America don't deserve the same consideration? Granted, the issue runs deeper than that, but on the surface, it's damn hard to defend giving yourself a raise, and giving the lowest wage earners in the US the finger.

So, there is the action of tying this to the estate tax cuts--so would you agree with me in saying that is also a "Stunt"?

Are we talking about the minimum wage bill the House is debating even as we speak? They had one of their midnight duels over this. The Repubs are linking this bill to an estate tax repeal, and the Dems are calling it (and I basically agree with this) a poison pill. They pass a bad bill, that either undermines the minimum wage, or goes before the Senate and dies. No minimum wage increase, but the political credit goes to the GOP. They can cast the Dems as voting against the minimum wage, and rest easy that no minimum wage was actually passed. That's how it looks anyway.

I'm with my party on this one, and I believe, the better argument. Why can't they just pass a minimum wage bill? Why the stunts and high drama?

Honestly, the whole thing is kind of fun to watch, though.

Looks like the minimum-wage / estate-tax-reduction combo worked. I'm with Rafique, I think we'd all be better off if Congress had to follow the single-purpose rule contained in many state constitutions, which prohibits bills which deal with multiple topics. A straight-up vote on each separate subject.

I heard somewhere that there is a direct, provable link between minimum wage and economic growth. No-one claimed it was a 1 for 1 relationship, but that it was provable, whereas tax cuts affects on economic growth were not provable. I have not seen any evidence either way, I just raise this as a potential topic of conversation.

The only direct, provable link between minimum wage and GDP growth is that raising the first can somewhat retard the second. IOW, the relationship is inverse. But it's a somewhat minor effect, simply because so few people actually make minimum wage in the first place. The main damage will be felt in the lowered availability of bottom-end jobs, which will, of course, affect the poor, unskilled, and young the most. There is a direct and proven major link between reducing taxes and increased GDP growth.

On the other hand, raising the minimum wage will increase illegal immigration pressures a wee bit. Everything comes with a price tag. On the third hand, it'll boost tax revenues a touch as well. Joshua M. has an actual point. A boost in the minimum wage seems a minor in high-cost coastal urban areas. But in low-cost regions it can seriously hurt jobs, by reducing their competitive cost edge over the high-cost urban areas in areas such as manufacturing.

This is the exact type of "ugly" politics that RealPolitik consists of, and it's one of the ways that compromise is forced into the system. Democratic pluralism at work, complete to the (figurative) blood and gore. Yeah, it would be nice if everything was its own seperate bill, but then we'd reach gridlock quickly whenever Congress was close to evenly divided. (Note: I don't think gridlock is always or even usually a bad thing.)

The text of the bill is not available yet, so it's tough to comment too much on the details. The "bones" are here. 34 Dems voted for the bill, 21 Republicans voted against it.

The GOP gets to show all those Dems voting against raising the minimum wage this fall. The Dems get to whine about tax breaks for the rich--though the "Bill Gates rich" really don't get much of a break. It's the "little rich" who get the big break.

I like the way you differentiate between the "rich," Tully. I think you've made a real point about that one. And I'll bet there are a lot of "little rich" dems out there who recognize and appreciate those breaks even if they would have voted against them.

I am somewhat ambivalent about the minimum wage laws in that I'm a little Keynesian about it -- the wages usually end up being whatever the local markets will bear. Average wages in California, where I'm moving from, are much higher than northern Maine, where I'm moving to. But I know that and don't expect to earn the same as a result. But the costs of living are usually never the same either, so it all evens out.

Yeah, there's a hell of a lot of yuppies and boomers of both parties heading into their retirement years, and with ordinary houses fetching up towards a million or more in some areas, and their IRA's stuffed into high six or low seven figures, they were looking at a reversion to the old $600K exclusion and 55% tax rates. Ouch!

If the new exclusion isn't indexed to inflation, Congress is still just punting it down the road and we'll be revisiting it someday. The "big rich" will, as before, "give away" their assets to charities and foundations controlled by their favored desecendants, as Buffet is doing. (Splitting a few billion between a few family foundations run by his kids, who are on salary and get to determine their own salaries...) One of the real blips in the old law was that those "little rich" ($2-$10M estates) actually paid the tax at a higher effective rate than the "big rich" ever did. The LR couldn't afford the legions of lawyers and didn't have the capital for setting up family foundations that would pass IRS scrutiny while still leaving the $$$ in control of the family.

As I've said over and over here the last few years, the "little rich" are the ones you least want to discourage with death taxes. It's exactly the kind of success that the middle class can aspire to through patience and hard work. The "big rich" you can try to beat on all you want, but they can afford to find ways to not pay. And do. The main effect of estate taxes on the big rich is to encourage them to give their money away to favored non-profits rather than to the government.

I'm amused to see the figures once again falling right into the ranges I predicted three years ago, when the GOP still thought they'd get a complete repeal. They never mentioned the loss of the step-up basis that would've nailed ALL estates for capital gains at death on a repeal, leaving an effective estate tax from dollar one on ALL estates at rates equal to the cap gains rate less provable investment.

The rate isn't what matters so much, it's the retention of the step-up basis and increasing the exemption. Hooking the rate to capital gains is both fair and equitable, as estates that large have a large chunk of unrealized cap gains in them. The previous higher rates essentially imposed a higher rate of capital gains taxation on heirs of estates over the exemption. The new rate structure retains the social engineering aspects of the original estate tax, while capturing the cap gains on smaller estates and exempting those who just worked hard and saved and made it to modern "well off" rather than rich.

A principle purpose of the estate tax is to prevent the creation of an eternally privileged, hereditary class of people with great wealth. At many levels, our law favors keeping money and property in commerce, not tied up for the benefit of a small, select group of individuals.

To best fulfill that purpose, we really should be focused on restricting the tools used by the mega-wealthy to allow perpetual trusts for the real benefit of generation after generation of young Astors and Rockefellors and Hiltons. However, we should also keep in mind that such money has a way of petering out of the family after a very few generations, as the young wealthy turn into the foolish wealthy.

As Tully points out, the moderate accumulation of wealth is a healthy thing, and the current estate tax structure penalizes those who are rich, but not rich enough to afford the really top-notch estate planning.

Pat,

I think you've just answered my question, but I'll ask it anyway. If we assume that the estate tax as a tool to prevent an etrenal aristocracy is just, but the problem is that the little rich get hosed, while the aristocrats can avoid the tax with their loopholes and tax shelters, wouldn't a neccessary step be to eliminate the loopholes? If the figures are right, you've got estates at $500K being taxed. That's hardly super-rich.

Also, I don't think we should be so consumed with preventing the accumulation of waelth in too few hands, that we attack waelth itself. Wealth, in and of itself is not bad. The endless, privileged aristocracy is bad for democracy, but we ought not punish the hardworking people who worked hard to be successful, just to get at the lazy, monied nobility.

Or something like that.

Well exactly, Rafique. The accumulation of wealth is a good thing. What's bad, in the long run, is the concentration of wealth in too few hands. Fortunately, there are more rich people in this country today than ever before.

Closing a few loopholes in the estate tax would, I think, be a good thing. There's a piece in the Wall Street Journal this morning about tax shelters and off-shore trusts, where multi-millionaires technically transfer title and control of all their property (houses, rolexes, artwork) to off-shore trusts, whose trustees then "loan" the property back to the millionaire. It shouldn't be as difficult as it is to call B.S. on that.

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