Two Senate committee chiefs are looking at ways to raise taxes for companies paying less than $ 15 an hour. This is part of a new strategy to incorporate President Joe Biden’s drive to raise the minimum wage to this level in his COVID-19 relief bill.
Senate Budget Committee Chair Bernie Sanders and Senate Finance Committee Chair Ron Wyden said they are considering the strategy after a heavy blow was dealt to prospects of including a wage increase in the bailout package.
On Thursday, the Senate MP ruled that the Democrats’ proposed minimum wage violated the rules of the legislative process used by Congressional leaders for Biden’s $ 1.9 trillion relief bill. The requirements stipulate that measures are primarily of a tax nature. Taxes are part of financial policy.
“In the days ahead, I’ll be working with my Senate colleagues to drive a change that will allow large, profitable companies that don’t pay workers at least $ 15 an hour to deduct tax and give small businesses the opportunity to do so get the incentives they need to raise wages, ”Sanders said in a statement.
Sanders, an independent Vermonter, added that his “amendment must be in this reconciliation law,” referring to the COVID-19 expense package.
Wyden, an Oregon Democrat, said in a statement he was considering “a tax penalty for mega-corporations that refuse to pay a living wage.”
The White House did not immediately respond to a request to comment on the ideas. Press secretary Jen Psaki said in a statement that Biden “respects the MP’s decision and the Senate process. He will work with the leaders of Congress to find the best way forward because no one in this country should work full time and live in poverty. “
White House Economic Advisor Brian Deese said Friday on MSNBC the government would speak to leaders “this morning and in the days ahead” to “find the best way” to continue and increase the minimum wage at the same time to make progress the auxiliary bill.
The developments – on the eve of the expected adoption of the relief law by the House – are causing uncertainty with regard to the economic rescue package. Congress leaders plan to pass it by March 14, when unemployment benefits expire under a December relief bill.
In addition to the wage increase, the bill includes $ 1,400 stimulus checks, an upgrade to improved unemployment benefits, and funding for the vaccine rollout, as well as money for state and local governments.
Democrats have less than three weeks to work out the changes and convince all 50 senators meeting with the party to support the tax hike – and the details of the minimum wage hike.
The idea came after Senate MP Elizabeth MacDonough found that the proposed incremental increase to a minimum wage of $ 15 an hour was inconsistent with the rules for the budget voting process. This process enables the Senate to bypass the 60-vote threshold that is customary in the Senate.
Targeting only large, profitable corporations could help allay the concerns of some moderate Democrats who are reluctant to support large-scale tax hikes. The tax hike game is likely to fall under the reconciliation rules that require all elements of the bill to have direct tax implications.
Still, Democrats don’t broadly support a $ 15 an hour wage requirement. Sens. Joe Manchin from West Virginia and Kyrsten Sinema from Arizona said they would not vote for a bill with the written provision.
This could mean negotiation as Wyden and Sanders develop a workaround strategy to force companies to increase employee salaries.
The push is also likely to spark criticism from Republicans and backlash from restaurants and retailers who oppose a $ 15 an hour wage requirement on the grounds that it will force businesses to close.
The International Franchise Association “supports a discussion about the minimum wage, but the only thing worse than doubling the labor cost of small businesses is being disguised by raising taxes behind the door in the middle of a pandemic while they are still struggling to get away from it all Worst of all recovering economic downturn in nearly a century, “Matt Haller, a group spokesman, said in a statement.
Caroline Harris, vice president of tax policy at the US Chamber of Commerce, said, “The last thing you want to do is collect taxes in the middle of an economic downturn.”
“Tax increases are just not part of the recipe for economic recovery,” Harris said in a statement emailed.
The Democrats had largely avoided major tax hikes under the stimulus package of $ 1.9 trillion, saying they would consider increasing the corporate and rich once the economy recovered from the pandemic. Treasury Secretary Janet Yellen said Monday the government was considering raising corporate taxes to fund an infrastructure bill that could be implemented later this year. It also signaled openness to a higher capital gain levy.
After the House votes on its version of the stimulus package, including the $ 15 minimum wage mandate, the bill will be referred to the Senate where it can be amended.