Senate Democrats are rushing to finalize a new tax provision that would penalize large companies that pay low wages. The change comes later Elizabeth MacDonough Parliamentary Senate He decided late on Thursday that a $ 15 minimum wage increase cannot be included in the Senate COVID aid package, which is currently being pushed by the House through a process known as budget reconciliation.
The plan being drafted by advisers to Senate Finance Committee chairman Ron Wyden of Oregon – in consultation with Senate budget chairman Bernie Sanders of Vermont – would impose a 5% fine on the payroll. payment for “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 other Democrats on that number and exactly which companies would face the penalties.
“Everyone at the convention is predicting ‘very big’ companies – think of Walmart, on Amazon,” a Democratic Senate aide told CBS News.
Under the proposal, which Senate Democrats hope to complete drafting early next week, smaller companies that raise workers’ wages would be eligible for income tax credits equal to 25% of wages – up to $ 10.00 per employer per year – tax incentives to increase wages.
“Basically, we are taking a strict approach to very large companies at the top, and a carrot approach to the smallest of small businesses, to try to encourage them to raise wages on their own,” said the aide.
Democratic aides, predicting an adverse decision by the Senate parliamentarian, began to work quietly on the “Plan B” proposal weeks ago. Tax penalties would apply not only to large companies that pay low wages to their own employees, but also to those that hire contractors – such as security guards – who receive low wages for the work they do on site.
House Speaker Nancy Pelosi on Friday stressed the importance of raising the minimum wage, saying at a news conference that “we will not rest until we pass the $ 15 minimum wage”.
The new impetus comes a day after Sanders announced that he would submit an amendment to the COVID exemption package to “remove tax deductions from large, profitable corporations that do not pay workers at least $ 15 an hour and provide incentives to small businesses they need increase wages. “
The White House acknowledged the new effort on Friday, without endorsing or rejecting it. “We have not revised the measure. We are certainly aware … But we have not revised and we do not have a final conclusion on this proposal,” White House Press Secretary Jen Psaki told reporters aboard Air Force One.
House Ways and Means President Richard Neal, whose House COVID relief project contains a $ 15 federal minimum wage increase, was also reluctant to consider. “I hesitate to, you know, say anything until they decide on a strategy. I don’t want to be seen as a doubt about what they are doing, “said Neal on Friday.
Jason Furman, who served as chairman of President Obama’s Council of Economic Advisers, expressed caution when tweeting “this is a really big, complicated and totally new proposal. It is * possible * that it works. It is * possible * that another fiscal version works But I would be extremely nervous about trying out a whole new idea like this, with virtually no verification. “
The House’s progressives were more enthusiastic about the tax proposal, but warned that it was not a substitute for a real minimum wage increase. “I’m very supportive of doing what we can, but at the end of the day we promise a minimum wage of $ 15, so if that minimum wage of $ 15 min isn’t in this package, we’ll have to figure out a way to do that and if that means reform obstruction, then we must reform the obstruction, “Congressman Pramila Jayapal (D-WA) told reporters.
This tax measure, which would be included in COVID’s $ 1.9 trillion relief bill, would have to win the support of two moderate Democrats – Joe Manchin of West Virginia and Kyrsten Sinema of Arizona – who opposed the inclusion of a generalized minimum wage of $ 15 in the COVID Relief Project.
Republicans are likely to refuse any proposal that involves imposing new taxes, even if these penalties apply only to the country’s largest companies. On Friday, minority leader in the House, Kevin McCarthy, called the proposal “stupid” and Senator Pat Toomey of Pennsylvania called it “redistribution of wealth and social engineering. It’s a bad idea.”
Democratic Congresswoman Alexandria Ocasio-Cortez told reporters on Friday that the inclusion of a minimum wage increase “softened negotiations on this process” for progressives in the House.
“I think Senator Sanders is doing the right thing by trying to include something, at the last minute, because the fact is that these negotiations, all the negotiations in this package, for many people, were based on a minimum of $ 15 salary,” he said. Ocasio-Cortez.
Ocasio-Cortez also challenged Democratic Senator Joe Manchin of West Virginia, who opposed raising the minimum wage to $ 15 an hour and instead suggested that it be increased to $ 11 an hour.
“His own constituents, those of West Virginia, want a minimum wage of $ 15. So I don’t even see what kind of leg he’s stepping on here, where most of his own state doesn’t agree with him,” said Ocasio-Cortez. A February survey by One Fair Wage Coalition, a group that supports raising the minimum wage, found that 63% of West Virginia residents support raising the minimum wage by 2025.
Raising the minimum wage is widely popular across the country, with a 2019 survey by the Pew Research Center showing that 67% of Americans support raising the minimum wage to $ 15. It even has support in some red states, as shown by an electoral initiative in Florida to raise the minimum wage increase to $ 15 by 2026, which was approved with the support of more than 60% of voters in the last election.
Some Republicans noted public support for raising the minimum wage. On Friday, Republican Senator Josh Hawley of Missouri announced a proposal to require companies with revenues of $ 1 billion or more to pay their employees $ 15 an hour.
Under Hawley’s plan, small business employees who earn less than $ 15 an hour would qualify for a “blue collar bonus” in the form of an automatic tax credit. “Megacorporations can pay their workers $ 15 an hour, and it’s past time to do so,” said Hawley, “but that shouldn’t happen at the expense of small businesses that are already struggling to do so.