Politics Cantwell Says No to Wait Staff Tip Deduction
Yesterday’s battle over the GOP’s “Repeal the estate tax/Raise the minimum wage” combo (including a tip credit deduction) was stalled by a Democratic filibuster. The Democrats, including Sens. Patty Murray and Maria Cantwell, didn’t like the estate tax repeal because they argued it would have socked social programs (by one estimate, the plan would have lowered federal tax revenue by $268 billion over 10 years) with a tax break for .3% of the Americans—the wealthiest Americans whose estates are valued over $10 million. They also didn’t support the tip deduction, which would have allowed management to deduct wait staff wages to well below minimum wage (in the neighborhood of $2.15p/h pay) by simply counting tips to make up the difference.
Washington State has a law outlawing the tip deduction scheme. So, the GOP argued that states like Washington—there are 6 others—which prevent management from deducting wages based on tips, wouldn’t be affected by the federal change.
Cantwell called bullshit on that by asking for an opinion from the Washington state Dept. of Labor. Here’s the response she got:
Under our preliminary analysis, this proposal, in effect, appears to nullify an employer’s obligation to pay the minimum wage rate in RCW 49.46.020 with regard to tipped employees. This means that Washington workers who receive tips - typically service industry workers - would see a decrease in income. However, the proposal does give states the right to amend their laws to specifically reinstate their current minimum wage rate laws. Until and unless the Washington State Legislature amends the minimum wage act to reinstate the current minimum wage rate provision for tipped employees, it would diminish workers’ rights in Washington State.
Of course, local Republicans are likely to argue that Cantwell is being an alarmist because—as noted in the DOL’s finding—Olympia can act to reinstate laws that prevent tip deductions. However, the obvious follow-up question to any Republican who argues that point is to ask how they would vote on that. Good luck asking GOP U.S. Senate candidate Mike McGavick that question. He’s fond of dodging questions by saying he doesn’t address state matters… at least when it’s convenient.
Indeed, McGavick’s statement sidesteps the analysis from the Washington state DOL. Here’s what he said:
Contrary to Sen. Cantwell’s claim, the bill would not lower the wages of employees receiving tips below Washington state’s minimum wage of $7.63 and hour. In response to Democrat claims, the U.S. Department of Labor issued a letter stating that the Department interprets the bill as protecting the current minimum wage in Washington state.
Yes it protects the minimum wage. Washington state’s minimum wage is $7.63..as opposed to the $7.25 raise proposed by the GOP legislation. Washington state’s wage would trump the lower federal wage—as it does now. But it doesn’t protect tips.
However, the real question I have for McGavick is this: Isn’t the GOP effort to pass an estate tax repeal by coupling it with a minimum wage increase (one that takes a slap at working class people like wait staff) and using cheesy tax breaks for Weyerhaeuser and Microsoft to entice Senator Cantwell, redolent of the ugly partisan gamesmanship McGavick claims to detest? Indeed, at campaign stop after campaign stop, McGavick says his campaign is a referendum on partisan chicanery like that.
Cantwell said the estate tax repeal and the minimum wage should be voted on separately. She’s right.
Meanwhile, old Sen. Ted Kennedy broke out a mighty fine sound bite: “Under the Republican bill, Paris Hilton and her family will get $250 million, while the tipped workers in Hilton hotels will lose up to $5.50 an hour.”
Clarification: In the post I did yesterday on all this, I reported that Cantwell would go for amending the estate tax repeal for estates valued up to $7 million. Cantwell said this would be an exemption for 99.7% of Americans. Meanwhile, the Democrats put out a press release saying the GOP estate tax repeal would only affect .3% of the wealthiest Americans. Taken in concert that didn’t seem to make sense. If the GOP wants to shelve the status quo, which taxes .3% of the wealthiest Americans, and Cantwell wants to repeal some of those estate taxes too…wouldn’t that mean her “Up-to-$7-million” exemption would nudge the number of those exempted from the tax up over 99.7%?
No. Here’s what I failed to say. The status quo isn’t 99.7% exempted from the tax. It’s more like 99.24%. It jumps to a $7 million cut off in 2009, which is what Cantwell supports. That change would exempt 99.7% of Americans from the tax. The GOP plan would go beyond that, and eliminate the tax altogether—for folks with estates valued at more than $7 million and up— in 2009 or 2010. That change would exempt the remaining .3% of Americans from the tax.
What percentage of Americans have estates worth between $5 and $7 million? It isn't 99.7, is it?
So raising the cutoff to $7 million is really tax relief for the next .4 or .5 percent, below the .3 percent who the Republicans think need help, right? Why does Cantwell support even that?