A plan that would have raised the nation's minimum wage and extended some targeted tax cuts was derailed last week by Senate Democrats because it was tied to a plan to expand estate-tax exemptions. The Senate has missed an opportunity to pass a fair compromise on two issues that have been particularly divisive.

Republicans offered the minimum wage hike despite opposing it because it hurts business. The bill was killed when Republicans failed to get the votes to avoid a filibuster. It would have raised the hourly minimum wage $2.10 over three years, preserved tax deductions on things such as college tuition and state sales taxes, and extended some business tax breaks.

But the backbreaker for Democrats was the proposal to exempt from estate taxes $5 million of an individual's and $10 million of a couple's estate. Democrats say easing the estate tax is unfair because it benefits only the rich. Their argument ignores the economic benefit of keeping money in the hands of people who know better than the government how to spend it. The estate tax is set to end in 2010, but will be reinstated in 2011 at a 55 percent rate for estates worth $1 million or more.

In 2005, 7.5 million Americans had net assets of $1 million or more (not including their primary residence), up 21 percent from the year before. According the Bureau of Labor Statistics, 1.9 million Americans earned at or below the federal minimum wage that year.

Advertisement

This bill would have been a win for both sides. Instead, Democrats showed a greater desire to penalize the wealthy (and keep alive an election-year issue) than to deliver relief to the nation's working poor. That's partisan politics at its worst.