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Tax breaks greased skids for wage bill

With a flourish on the South Lawn of the White House last August, President Bill Clinton signed the Minimum Wage Bill into law.

But it was big business that sighed with relief. Though the minimum wage was raised by 90 cents from $4.25 an hour to $5.15, the same bill handed out tax breaks that will cost the country $30 billion over the next 10 years.

The bill provided:

  • $18 billion in tax breaks to pharmaceutical, computer, electronics and soft drink companies;
  • $6 billion to the 610,000 members of the National Federation of Independent Business in pension law reform benefits;
  • $4.7 billion to NFIB members in business equipment deductions;
  • $452 million to members of the National Association of Convenience Stores for equipment depreciation rule changes;
  • $427 million to Hewlett-Packard, Johnson & Johnson, Intel, Amway and others for tax changes on overseas assets;
  • $165 million to Pizza Hut, Domino's Pizza and Godfather's Pizza for "tip credit" and Social Security requirement changes.

The difference between early opposition and later acquiescence of Republicans to the bill was money.

According to The Washington Post, the tax breaks were bought and paid for by political action committees that gave lavishly to members of the House and Senate tax-writing committees.

The 10 top PACs in the last Congressional cycle were insurance ($3.3 million), health professionals ($2.1 million), oil and gas ($1.7 million), securities and investment ($1.6 million), lawyers and law firms ($1.5 million), commercial banks ($1.4 million), pharmaceuticals and health products ($1.1 million), transportation unions ($1.1 million), air transport ($1 million) and telephone utilities ($900,000).

The Post listed the following amounts donated by PACs to Senate Finance Committee members: Kent Conrad, D-N.D., $2.5 million; Alfonse D'Amato, R-N.Y., $2.25 million; Phil Gramm, R-Texas, $1.7 million; Larry Pressler, R-S.D., $1.6 million; Orrin Hatch, R-Utah, $1.5 million; Daniel Patrick Moynihan, D-N.Y., $1.4 million; and John B. Breaux, D-La., $1.3 million.

PAC contributions to House Ways and Means Committee members were: Dick Zimmer, R-N.J., $994,871; Charles B. Rangel, D-N.Y., $625,387; Bill Thomas, R-Calif., $579,000; Greg Laughlin, R-Texas, $558,000; John Ensign, R-Nev., $553,000; Phil English, R-Pa., $516,000; Jon Christensen, R-Neb., $499,000.

What the Post described as the "marriage between the Democrats' minimum wage increase and a Republican grab bag of business tax breaks" occurred when Gingrich, realizing many Republicans could not face election campaigns opposing minimum wage, reached out to the National Federation of Independent Business.

By the time the convenience store lobby, representing such chains as Seven-Eleven, Kum & Go and others, entered the tax-provision fray, said the Post writers, "business interests had come to view the bill as 'the last train leaving the station in the 104th Congress.' " And everyone who could climbed aboard.

We the ignorant public applauded or complained about the minimum wage blip, little realizing we were missing the main event. Outrage seems to have departed from the land. It has probably gone where shame went.

National Catholic Reporter, March 28, 1997