Democrats pursue tax penalties for companies that pay low wages

Leading Senate Democrats are pushing the White House to consider a tax penalty for large corporations unless they pay workers $ 15 an hour, as they work to replace the loss with an increase in the minimum wage of Joe Biden’s $ 1.9 billion stimulus bill.

The last-minute change sought by top leaders in Biden’s party highlights unrest among Progressive Democrats over the expected absence of any provisions requiring companies to pay higher wages in the tax package.

The question is becoming a flashpoint among Democrats as stimulus bill, which is Biden’s top legislative priority, moves to the Senate after being passed by the U.S. House of Representatives on Saturday morning.

Ron Wyden, Chairman of the Senate Finance Committee, and Bernie Sanders, Chairman of the Senate Budget Committee, are chaired by Ron Wyden, Chairman of the Senate Finance Committee, and Bernie Sanders, Chairman of the Senate Budget Committee.

It developed after Democrats’ hopes for a direct minimum wage hike in the stimulus bill, which is included in House legislation, were dashed in a decision Thursday night by Elizabeth MacDonough, the so-called Member of the Senate who advises on the procedure in the upper chamber.

She said the measure was not a budget provision that could be approved by a simple majority of lawmakers, which Democrats rely on to bypass Republican opposition.

“The American people have elected Democrats to get things done, and they will not take the ‘process’ as an excuse not to implement an extremely popular policy,” Wyden said Friday.

“We couldn’t get in through the front door or the back door, so we’ll try to go through the window,” he added. Wyden specifically said his plan would impose a 5 percent tax on the total payroll of large companies that did not offer sufficient wages, while providing tax incentives, but no penalties for small businesses to raise their wages.

The move represents a way for Democrats to downplay disappointment among progressive lawmakers over the failure to pass a steady increase in the federal minimum wage, which has been stuck at $ 7.25 an hour since 2009. But Wyden’s plan’s political outlook is highly uncertain and the White House has been cool so far. Jen Psaki, the White House press secretary, said on Friday that she had not seen her again. “Where we are now, we are looking for the best ways to increase the minimum wage in the future,” she said.

Many economists, political experts and activists who championed a minimum wage increase have warned that Wyden’s plan was a poor substitute.

“It’s understandable that Senate Democrats are exploring alternatives to the minimum wage to raise the wages of low-wage workers. However, the measures are limited in scope, ”said Molly Kinder, a member of the Brookings Institution’s Metropolitan Policy Program.

Kinder said the focus on big business “would exclude most low-wage workers,” including “home health aides, nursing home staff and hospital janitors” on the front lines. of the response to the Covid-19 pandemic, and could encourage companies to outsource the work of contractors. Additionally, many of America’s largest companies have already announced plans to pay at least $ 15 an hour in wages, so even for the largest employers the impact could be relatively small.

According to a list compiled by the Economic Policy Institute, a left-wing think tank, Amazon, Walmart and Starbucks are already implementing a minimum wage of $ 15. Some activists feared the tax plan was also a distraction from an even more aggressive legislative push. While some states and cities in the United States have already decided to increase their own minimum wage to $ 15 over time, others like Pennsylvania, Georgia, and Wisconsin are still stuck at the federal minimum.

Terrysa Guerra, political director of United for Respect, an advocacy group for retail workers, said “the bypass proposals to penalize businesses” were a “creative political maneuver,” but feared it might “not help us. move away from the urgent priority of passing a bill. this would begin the process of increasing the minimum wage to $ 15 an hour ”.

But some progressive Democratic lawmakers have suggested they could still push Wyden’s proposal, even if it was second best. This could complicate the path to the final adoption of the stimulus package. If there are any changes to the law in the Senate, it will have to return to the House for a new vote.

New York Democrat MP Alexandria Ocasio-Cortez said on Friday the proposal was “certainly not a replacement for a $ 15 minimum wage,” but Sanders “was doing the right thing by trying to include something” .

$ 7.25

Federal hourly minimum wage, which has not increased since 2009

A potential tax sanction, however, is likely to spark even fiercer opposition among Republicans to the stimulus legislation and resistance from some business groups.

Sean Kennedy of the National Restaurant Association said, “No industry will be more vulnerable in 2021 than restaurants. Continuing to push for a minimum wage increase and the elimination of tip credit as part of this stimulus bill will only force restaurants to close and lose more jobs. “

And in a tweet Friday, Jason Furman, a Harvard University economist and former adviser to President Barack Obama, warned that the Wyden plan, above all, had not been tested.

“This is a brand new, very important and complicated proposition. It is possible that it will work. It is also possible that another fiscal version will work. But I would be extremely nervous to try out a whole new idea like this with virtually no control, ”he said.

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