Senate Democrats are vying to finalize a new tax provision that would penalize large companies that pay low wages. The step comes later Senate MP Elizabeth MacDonough ruled Thursday night that a $ 15 minimum wage increase cannot be included in the COVID relief package in the Senate, which is currently being pushed through the chamber through a process known as budget reconciliation.
The plan drafted by the aides of Senate Finance Committee Chairman Ron Wyden of Oregon in close consultation with Vermont Senate Budget President Bernie Sanders would impose a 5% tax penalty on companies “very large “who do not pay a certain amount to workers. . That amount is still unclear: Wyden favors the $ 15 per hour, but is currently seeking comments from fellow Democrats on that figure and on which companies should suffer the sanctions.
“Everyone in the caucus anticipates ‘very large’ companies: think Walmart, Amazon,” a Democratic Senate aide told CBS News.
Under the proposal, which Senate Democrats hope to finish drafting early next week, smaller companies that increase their workers ’wages would be eligible for income tax credits equal to 25% of wages. (up to $ 10.00 per employer per year). to increase wages.
“Basically, we have a strict approach for larger companies at the top, and the carrot approach for smaller companies to try to encourage them to raise wages on their own,” he said. assistant.
Democratic aides, who anticipated an adverse ruling by the Senate MP, began working quietly on the “Plan B” proposal several weeks ago. Tax sanctions 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 on the premises.
House Speaker Nancy Pelosi on Friday stressed the importance of raising the minimum wage and said at a news conference that “we will not rest until we exceed the $ 15 minimum wage.”
The new impetus comes a day after Sanders announced it would introduce an amendment to COVID’s relief package to “remove tax deductions from large, profitable companies that don’t pay workers at least $ 15 an hour and provide small businesses with incentives.” they need to raise wages. “
The White House acknowledged the new effort on Friday without approving or rejecting it. “We have not reviewed the measure. We are certainly aware of it … But we have not reviewed it and we have no final conclusion on this proposal,” White House Press Secretary Jen Psaki told reporters on board of Air Force One.
House Ways and Means President Richard Neal, the house’s COVID relief bill that contains a $ 15 federal minimum wage hike, was also reluctant to consider it. I don’t want to be perceived as a second guesser what they do, ”Neal said Friday.
Jason Furman, who chaired President Obama’s Council of Economic Advisers, sounded a cautionary note and tweeted “This is a whole new and complicated proposal. It may work. It’s also * possible” that another tax version works. But I would be extremely nervous to try a new idea like this without virtually any examination. “
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 everything we can, but at the end of the day we promised a minimum wage of $ 15, so if that minimum wage of $ 15 is not in this package, we’ll have to find a way to get it. and if that means reforming the filibuster, we should reform the filibuster, ”Congresswoman Pramila Jayapal (D-WA) told reporters.
This fiscal measure, which would be included in COVID’s $ 1.9 trillion relief bill, should win the support of two moderate Democrats – Joe Manchin of West Virginia and Kyrsten Sinema of Arizona – who objected to including a general minimum wage of $ 15 on the COVID Relief Invoice.
Republicans are likely to reject any proposal that involves imposing new taxes, even if those sanctions would only apply to the country’s largest companies. On Friday, House Minority Leader Kevin McCarthy called the proposal “silly” and Sen. Pat Toomey of Pennsylvania called it a “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 raise in the minimum wage had “softened the negotiation of 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 a lot of people, were based on the $ 15 minimum wage.” , said Ocasio-Cortez.
Ocasio-Cortez also challenged Democratic Sen. Joe Manchin of West Virginia, who has been opposed to raising the minimum wage to $ 15 and instead suggested raising it to $ 11 an hour.
“His constituents, the West Virginians, want a minimum wage of $ 15. So I don’t even see what kind of leg he’s on here, where most of his own state disagrees with him.” , said Ocasio-Cortez. A February poll by the One Fair Wage Coalition, a group that supports a minimum wage hike, found that 63% of West Virginians support the 2025 minimum wage increase.
The minimum wage increase is very 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 evidenced by a voting initiative in Florida to increase the minimum wage increase to $ 15 in 2026, which happened with the support of more than 60% of voters in the last election.
Some Republicans have noted public support for a raise in the minimum wage. On Friday, Republican Sen. Josh Hawley of Missouri announced a proposal to require companies with revenues of $ 1 billion or more to pay their employees $ 15 per hour.
Under Hawley’s plan, small business employees earning less than $ 15 an hour could get a “Blue Neck Bonus” in the form of an automatic tax credit. “Mega-corporations can pay their workers $ 15 an hour, and they’ve been doing it for a long time,” Hawley said, “but that shouldn’t happen at the expense of small businesses already struggling to get it.
Sarah Ewall-Wice contributed to the reports.