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Senate Democrats are rushing to finalize a new tax provision that would penalize large companies that pay low wages. The move comes after Parliamentarian of the Senate Elizabeth MacDonough ruled Thursday night that a $ 15 minimum wage hike couldn’t be included in the Senate COVID relief plan, which is currently being pushed through the chamber through a process known as budget reconciliation.
The plan drafted by aides to Senate Finance Committee chairman Ron Wyden of Oregon – in close consultation with Senate Budget Chairman Bernie Sanders of Vermont – would impose a 5% tax penalty on “very large” businesses who do not pay workers a certain amount. . It is still not clear: Wyden is in favor of $ 15 an hour, but is currently seeking comments from fellow Democrats on that number and which companies would face the sanctions.
“Everyone in the caucus is envisioning ‘really big’ companies – think Walmart, Amazon,” a Democratic Senate aide told CBS News.
Under the proposal, which Senate Democrats hope to complete drafting early next week, small businesses that raise the wages of their workers 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 have the stick approach for the really big companies at the top, and the carrot approach for the smaller ones of the small companies to try and encourage them to raise wages on their own,” he said. ‘assistant.
Democratic assistants, anticipating an unfavorable decision by the parliamentarian of the Senate, began to work quietly 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 the work they do in the industry. the locals, the residents.
House Speaker Nancy Pelosi on Friday stressed the importance of raising the minimum wage, telling a press conference that “we will not rest until we pass the minimum wage of 15 dollars “.
The new impetus comes a day after Sanders announced he would introduce an amendment to the COVID relief program to “ remove tax deductions from large profitable companies that do not pay workers at least $ 15 an hour and for provide small businesses with incentives. they have to increase wages. “
The White House acknowledged the new effort on Friday without approving or rejecting it. “We have not examined the measure. We are certainly aware of it … But we have not examined and we do not have a final conclusion on this proposal,” said the White House press secretary, Jen Psaki, to reporters on Air Force One.
House Ways and Means Chairman Richard Neal, whose House COVID relief bill contains a $ 15 federal minimum wage hike, was also reluctant to intervene. I want to be seen as having doubts about what they’re doing, ”Neal said on Friday.
Jason Furman, who chaired President Obama’s Council of Economic Advisers, warned, tweeting, “This is a brand new, very important, complicated proposal. It * may * work. It is too * possible * another fiscal version would work. But I’d be extremely nervous to try out a whole new idea like this with virtually no control. “
House progressives were more enthusiastic about the tax proposal, but warned that it did not replace a real increase in the minimum wage. “I’m very much in favor of doing whatever we can, but at the end of the day we promised a minimum wage of $ 15, so if that $ 15 minimum wage isn’t part of that package, we’re going to have to find a way to push it through and if that means reforming filibuster, then we should reform filibuster, ”Congresswoman Pramila Jayapal (D-WA) told reporters.
This tax measure, which would be included in the $ 1.9 trillion COVID relief bill, is expected to gain the support of two moderate Democrats – Joe Manchin of West Virginia and Kyrsten Sinema of Arizona – who have turned opposed to including a general minimum wage of $ 15 in the COVID Relief Bill.
Republicans will likely balk at any proposal involving the imposition of new taxes, even if those sanctions would only apply to the country’s largest companies. Minority House Leader Kevin McCarthy on Friday called the proposal “stupid” and Pennsylvania Senator Pat Toomey called it “wealth redistribution and social engineering. It’s a bad idea”.
Democrat MK Alexandria Ocasio-Cortez told reporters on Friday that the inclusion of a minimum wage hike had “made it easier to negotiate 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 point is that these negotiations, the whole negotiations of this package, for a lot of people, were based on the minimum of $ 15. salary, ”Ocasio-Cortez said.
Ocasio-Cortez also challenged Democratic Senator Joe Manchin of West Virginia, who voiced his opposition to increasing the minimum wage to $ 15 and instead suggested it be raised to $ 11 an hour.
“His own constituents, West Virginians, want a minimum wage of $ 15. So I can’t even see what kind of leg he’s standing where the majority of his own state doesn’t agree with him.” said Ocasio-Cortez. A February poll by the One Fair Wage Coalition, a group that supports a minimum wage increase, found that 63% of Western Virginians support the minimum wage increase by 2025.
The minimum wage increase is very popular across the country, with a 2019 poll by the Pew Research Center showing that 67% of Americans support raising the minimum wage to $ 15. It even enjoys the backing of some Red states, as evidenced by a Florida voting initiative to raise the minimum wage hike to $ 15 by 2026, which was passed with the support of over 60% of voters. in the last election.
Some Republicans have taken note of public support for a minimum wage hike. Republican Senator Josh Hawley of Missouri on Friday 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-businesses can afford to pay their workers $ 15 an hour, and it’s high time they did,” said Hawley, “but it shouldn’t come at the expense of struggling small businesses. already to achieve it.
Sarah Ewall-Wice contributed reporting.
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