Senate Democrats are racing to finalize a new tax provision that would penalize large companies that pay low wages. The move comes afterruled Thursday night that a $15 minimum wage hike cannot be included in the Senate COVID relief package, which is currently being pushed through the chamber through a process known as budget reconciliation.
The plan being drafted by aides to Senate Finance Committee chair Ron Wyden of Oregon — in close consultation with Senate Budget Chair Bernie Sanders of Vermont — would impose a 5% payroll tax penalty on “very large” companies that do not pay workers a certain amount. That amount is still unclear: Wyden favors $15 an hour, but is currently seeking feedback from fellow Democrats on that figure and on exactly which companies would face the penalties.
“Everyone in the caucus is envisioning ‘very large’ companies – think Walmart, Amazon,” a Senate Democratic aide told CBS News.
Under the proposal, which Senate Democrats hope to finish crafting by early next week, smaller businesses that raise their workers’ wages would be eligible for income tax credits equal to 25% of wages — up to $10,00 per employer to year — tax incentives to increase wages.
“Basically we’re having the stick approach for the very big companies at the top, and the carrot approach for the smallest of small businesses to try to encourage them to raise wages on their own,” the aide said.
Democratic aides, anticipating an adverse ruling from the Senate parliamentarian, began quietly working on the “Plan B” proposal several weeks ago. The tax penalties would apply not only to large companies that pay their own employees low wages, but also to those that hire contractors – such as security guards – who earn low wages for work they do on premises.
House Speaker Nancy Pelosi on Friday stressed the importance of the minimum wage hike, saying at a press conference that “we will not rest until we pass the $15 minimum wage.”
The new push comes one day after Sanders announced that he would introduce an amendment to the COVID relief package to “take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages.”
The White House acknowledged the new effort Friday without endorsing or rejecting it. “We haven’t reviewed the measure. We are certainly aware… But we have not reviewed and we don’t have a final conclusion on that proposal,” White House Press Secretary Jen Psaki told reporters aboard Air Force One.
House Ways and Means Chairman Richard Neal, whose House COVID relief bill does contain a $15 federal minimum wage hike, was also reluctant to weigh in. “I hesitate to, you know, to say anything until they decide on a strategy. I don’t want to be perceived as second guessing what they’re doing,” Neal said Friday.
Jason Furman, who…
Go to the news source: Senate Democrats move immediately to “Plan B” on minimum wage