Brown seeks ‘freeloader fee’
If a “mega corporation” doesn’t pay its full-time employees enough money to keep them off social welfare programs, the corporation ought to pay back the American taxpayers with higher taxes, said U.S. Sen. Sherrod Brown.
Brown, D-Ohio, proposed Wednesday the Corporate Freeloader Fee that would make that idea a possibility. He also proposed the Patriot Employers Tax Credit, which would be given to companies that pay their employees at least $15 per hour, and provide workers with adequate health care and retirement options.
The proposal comes as talk of tax reform occupies Washington, D.C.
Brown said he thinks the initiatives should garner the support of Democrats and Republicans alike, but he worries Republican leadership will work out back room deals that give tax breaks to the wealthy 1 percent instead of reform that translates into meaningful economic growth and support of working Americans.
“Frankly, they don’t need a tax cut. The 1 percent is doing fine, thank you,” Brown said.
Ohio’s Republican Sen. Rob Portman has said the country’s complicated tax code has encouraged companies to move overseas. But a simplified tax code would encourage investment in the country, create jobs and give workers a competitive advantage, Portman said last week.
“The goal of corporate and personal tax reform is to simplify the code. Brown’s proposal does anything but simplify the code. It’s a step not only in the wrong direction, it’s out of step with most of Congress,” said Kevin Wyndham, chair of the Trumbull County Republican Party. “The tax code needs reformed to provide incentives to companies to bring jobs back to this shore, keep jobs in this country, and bring earnings being held oversees back to this country so they can be taxed and that money be put to use here.”
The proposal amounts to a veiled attempt to raise the minimum wage, not reform the tax code, Wyndham said.
“Brown’s plan is easy to package, float to the market and sound like a champion of the working poor — punish the big bad company for compensating its employees less than what he and many Democrats think should be the minimum wage,” Wyndham said.
Brown’s tax credit equals 10 percent of the first $15,000 of wages earned by each employee and also would require companies to maintain U.S. headquarters and make up the difference in regular and military compensation for National Guard and Reserve employees who are called for active duty.
The freeloader fee would apply to corporations that file at least $100,000 in payroll taxes with the IRS daily for at least 180 days straight. It would not apply to Ohio small businesses, Brown said. The fee would be based on the number of employees at a company who earn less than 218 percent of the federal poverty rate, or $26,250 in 2017, Brown said. The fee increases as the percentages of a company’s workforce who earn less than a living wage goes up. Companies can reduce fees by providing health care benefits and making contributions to employee retirement plans.
The tax credit acts as the “carrot,” while the fee acts as the “big stick,” that would end the practice of American taxpayers subsidizing the wages of the corporations’ employees who work full time and still need government assistance, Brown said.
“I want to cut taxes for working families and for businesses that support good-paying American jobs — not multinational corporations that ship our jobs overseas or squeeze American workers. Tax reform must put American workers first,” Brown said.
Wyndham said businesses, even “mega corporations,” should be able to set wages based on industry demands. And, the proposal doesn’t consider the foreign competition those corporations face, and this change could force them out of the market, costing American jobs, Wyndham said.
Tax reform should save only two deductions — mortgage interest on a residence and charitable contributions — Wyndham said. That will simplify the tax code, lower the rate and amount to the reform Democrats and Republicans want to see, and are capable of accomplishing, if the two parties can work together, Wyndham said.