Senior Senate Democrats dropped a burgeoning backup plan to hike the federal minimum wage through the tax code after hitting numerous stumbling blocks, The Washington Post reports.
The Biden administration said last week it would not overrule the Senate parliamentarian’s decision that the $15 minimum wage increase was inadmissible under the budget reconciliation rules. Senate Budget Chairman Bernie Sanders and Finance Chairman Ron Wyden quickly announced a “Plan B” that would instead impose tax penalties on large corporations that fail to pay workers at least $15 per hour while offering tax incentives to small businesses to raise wages.
But Sanders, Wyden, and other Democrats involved in the negotiations have abandoned the plan as they push for a speedy passage of the next round of coronavirus relief before enhanced federal unemployment benefits expire mid-March.
Plan faces administrative hurdles:
Economists and tax experts detailed extensive administrative hurdles to trying to hike wages through the tax code and noted that companies could easily avoid the tax penalties.
For one, companies could simply reclassify workers as contractors to avoid potential tax hits.
“I would be extremely nervous about trying out a brand new idea like this with virtually no vetting,” said former Obama administration economist Jason Furman.
Democrats plot standalone bill:
Democrats have said they plan to include a $15 minimum wage in a later bill through it’s unclear how they would avoid a filibuster that would sink the legislation.
Even before the parliamentarian’s ruling, the wage hike seemed unlikely after getting pushback from centrist Democrats Joe Manchin and Kyrsten Sinema.
“We’re going to have to spend the next several days or even weeks figuring out what the best path forward is, but he’s committed to doing that,” White House press secretary Jen Psaki told Fox News on Sunday.