Senate Democrats are rushing to finalize a new tax provision that would penalize large corporations that pay low wages. The move comes after Senate Member of Parliament Elizabeth MacDonough ruled Thursday night that a $ 15 minimum wage increase cannot be included in the Senate’s COVID aid package, which is currently being pushed through the chamber through a process known as budget reconciliation.
The plan drafted by aides to Senate Treasury Committee Chairman Ron Wyden of Oregon – in close consultation with Vermont Senate Budget Chairman Bernie Sanders – would impose a 5% payroll tax penalty on “very large” companies that do not pay employees a specified amount. . . That amount is still unclear: Wyden is in favor of $ 15 an hour, but is currently seeking feedback from fellow Democrats on that figure and exactly which companies would receive the sanctions.
“Everyone in the caucus thinks of ‘very big’ companies – think Walmart, Amazon, ” a Senate Democratic assistant told CBS News.
Under the proposal, which Senate Democrats hope to complete by early next week, smaller companies that increase their employees’ wages would qualify for tax breaks of 25% of wages – up to $ 10.00 per employer per years – tax breaks to increase wages.
“In fact, we have the stick approach for the very large companies at the top, and the carrot approach for the smallest small companies to encourage them to raise wages themselves,” the assistant said.
Democratic aides, in anticipation of a negative ruling from the Senate MP, began quietly working on the “Plan B” proposal a few weeks ago. The tax fines would apply not only to large corporations that pay their own workers low wages, but also those who hire contractors – such as security guards – who earn low wages for work they do on-site.
House Speaker Nancy Pelosi stressed the importance of the minimum wage hike on Friday, saying at a news conference that “we will not rest until we pass the $ 15 minimum wage.”
The new push comes a day after Sanders announced that he would introduce a change to the COVID relief package to “take away tax deductions from large, profitable companies that don’t pay employees at least $ 15 an hour and to provide small businesses with the incentives they should. increase wages. “
The White House acknowledged the new effort on Friday without approving or rejecting it. “We have not revised the measure. We are sure … But we have not revised it and we have no definitive conclusion on that proposal,” White House press secretary Jen Psaki told reporters on board Air. Force One.
Richard Neal, chairman of House Ways and Means, whose house COVID bill includes a $ 15 federal minimum wage hike, was also reluctant to weigh in. “I hesitate, you know, to say anything until they have a strategy. “I don’t want to be seen as guessing what they’re doing,” Neal said Friday.
Jason Furman, who chaired President Obama’s Council of Economic Advisers, sounded a warning and tweeted, “This is a very big, complicated, brand new proposal. It’s * possible * it will work. It’s also * possible *. that another tax version works. But I would be very nervous trying a brand new idea like this without virtually no control. “
House progressives were more enthusiastic about the tax proposal, but warned it was no substitute for a genuine minimum wage increase. “I’m very much in favor of anything we can, but at the end of the day we promised a minimum wage of $ 15, so if that $ 15 min wage isn’t in this package, we’ll have to figure out a way to get through it and if that means reforming the filibuster, then we should reform the filibuster, ”Congressman Pramila Jayapal (D-WA) told reporters.
This tax measure, which would be included in the $ 1.9 trillion COVID bill, should have the backing of two moderate Democrats – Joe Manchin of West Virginia and Kyrsten Sinema of Arizona – who oppose the inclusion of a blanket minimum wage of $ 15 in the COVID emergency bill.
Republicans are likely to hesitate on any proposal imposing new taxes, even if those sanctions only apply to the country’s largest companies. On Friday, House Minority Leader Kevin McCarthy called the proposal “stupid” and Pennsylvania Senator Pat Toomey called it “wealth redistribution and social engineering. It’s a bad idea.”
Democratic Congressman Alexandria Ocasio-Cortez told reporters on Friday that the inclusion of a minimum wage hike had “softened negotiations on this process” for progressives in Parliament.
“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, the whole negotiation of this package, was based on the $ 15 minimum wage for a lot of people, Ocasio-Cortez said.
Ocasio-Cortez also challenged Democratic Senator Joe Manchin of West Virginia, who opposes raising the minimum wage to $ 15 and has instead proposed raising it to $ 11 an hour.
“His own constituents, West Virginians, want a $ 15 minimum wage. So I don’t even see what kind of leg he’s on here where the majority of his own state disagrees,” said Ocasio-Cortez. A February poll by the One Fair Wage Coalition, a group that supports minimum wage increases, found that 63% of Western Virginians are in favor of an increase in the minimum wage by 2025.
Raising the minimum wage is very popular across the country, with a 2019 survey from the Pew Research Center showing that 67% of Americans are in favor of raising the minimum wage to $ 15. It even has support in some red states, as evidenced by a Florida voting initiative to raise the minimum wage increase to $ 15 by 2026, which was passed with support from more than 60% of voters in the last election.
Some Republicans have taken note of public support for a minimum wage hike. 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, employees of small businesses earning less than $ 15 an hour would be eligible for a “Blue Collar Bonus” in the form of an automatic tax credit. “Mega corporations can afford to pay their employees $ 15 an hour, and it’s been a long time since they did,” Hawley said, “but this shouldn’t be at the expense of small businesses already struggling to make it.
Sarah Ewall-Wice contributed to reporting.