Estate tax cut fails to pass in Senate

The U.S. Senate rejected a Republican-sponsored bill that would have raised the U.S. minimum wage and cut inheritance taxes on multimillion dollar estates.

The measure needed 60 votes for final congressional approval, but fell four votes short, with 56 senators voting in favor of the bill and 42 against.

Republicans and small-business organizations, including the National Retail Federation and the National Federation of Independent Business, say the estate tax—which they have dubbed the “death tax”—makes it difficult for many Americans to pass on their family owned businesses to their children.

The bill would also have increased the hourly minimum wage for U.S. workers from $5.15 an hour to $7.27 over the next three years.

Opposition Democrats have been calling for an increase in the minimum wage, which has not been raised since 1997. But many of them denounced the combined bill as a cynical ploy to achieve a cut in the estate tax, which is a major goal for conservative Republicans.

Under President Bush’s first tax cut, the estate tax shrinks through this decade and disappears in 2010. It reappears at older and higher rates in 2011.

The estate tax and minimum wage bill would, by 2015, increase the amount of an estate exempt from taxation to $5 million for an individual and $10 million for a couple. Estates worth up to $25 million would be taxed at capital gains rates, currently 15 percent and scheduled to increase to 20 percent. The top tax rate on larger estates would fall to 30 percent by 2015.