As the Senate headed toward its August recess, the fate of two major bills�one to revamp federal pension policy and the other to cut federal inheritance taxes, boost the minimum wage and extend expiring tax breaks�was up in the air.
If the tax bill is blocked the senate "will not return to it" in 2006.
--Majority Leader Bill Frist (R-TENN.)
The House July 28 moved the issues to the Senate�s court by passing the pension bill by a 279-131 vote and the tax package early the next day by a narrower 230-180 margin. If the Senate also clears the bills, they will mean big changes for construction companies and workers. "We like the pension bill. We like the tax package," says Jeffrey Shoaf, Associated General Contractors� senior director for government and public affairs. "We like the substance of the legislation."
At ENR press time, the Senate picture was "so fluid," that the outcome was hard to read, says Dana Thompson, Sheet Metal and Air Conditioning Contractors National Association assistant legislative affairs director. The key test was an expected Aug. 4 vote to cut off a possible filibuster on the three-pronged tax measure, dubbed the "trifecta." Majority Leader Bill Frist (R-Tenn.) needed 60 votes to keep the bill alive. GOP leaders hoped to overcome Democrats' objections to estate-tax cuts by including a $2.10-per-hour minimum-wage hike over three years and extending the research credit and other popular breaks. Sen. Edward Kennedy (D-Mass.) wasn't buying. "It's political blackmail to say the only way that minimum wage workers can get a raise is to give tax giveaways to the wealthiest Americans,� he said. Frist warned that if opponents prevail, �We will not return to it this year....There will be no second chances.�
It's "political blackmail" to link a minimum-wage hike and estate-tax reduction.
--Sen. Edward Kennedy (D-MASS.)
Construction groups have sought permanent repeal of what they term the "death tax." The House bill doesn�t go that far. But it gradually increases the size of estates exempt from the estate tax, to $5 million per person in 2015. For 2006, the exemption limit is $2 million. The bill would cut the tax rate for estates from $5 million to $25 million from as much as 46% now, to the capital gains tax rate, currently 15%. The rate for estates above $25 million would phase down to 30% by Jan. 1, 2015.
What the House Bills Would Do:
|PENSION OVERHAUL :|
|Categorize financially struggling multi-employer plans as "endangered" or "critical."|
|Require such plans to set up programs to improve financial health.|
|When plans have funding deficiencies, replaces currently required contributions and excise tax with temporary surcharge whose proceeds go to the plan.|
|Gives employers in severely ailing plans the alternative to negotiate reductions in some types of retirement benefits. Current law has tough restrictions on cutting back such benefits.|
|'TRIFECTA' TAX PACKAGE:|
|Reduce permanently, but not repeal, estate tax.|
|Exempt estates of $5 million or less from estate tax; cut rate on estates from $5 million to $25 million to capital gains rate, now 15%; cut rate for estates over $25 million to 30%.|
|Increase minimum wage from $5.15 now to $7.25 over three years|
|Extend many expiring tax breaks, including research credit, for one year.|
source: House Ways and Means Committee; Joint Tax Committee;
National Coordinating Committee for Multiemployer Plans; industry sources, ENR
If the "trifecta" fails, it's uncertain whether the pension bill will survive. At stake for construction are provisions rewriting rules for multi-employer plans. Randy DeFrehn, National Coordinating Committee for Multiemployer Plans' executive director, says about half of 1,600 U.S. multi-employer plans and 30% of 9.9 million workers and retirees those plans cover are in construction.
"We're very pleased with what's contained in the [pension] bill."
--randy defrehn, multiemployer
pension plan commitee
The bill classifies multi-employer plans less than 80% funded as �endangered� and those less than 65% funded as �critical.� It sets deadlines for such plans to carry out recovery programs. SMACNA�s Thompson says for severely ailing plans the bill gives bargaining parties �the option to negotiate away some retirement benefit add-ons...a smart provision� that aims to keep them from being taken over by the Pension Benefit Guaranty Corp. and also keep employers operating.
Says DeFrehn: �We�re very pleased with what�s contained in the bill. We just need to see it get passed in the Senate right now.�