Bills
| 3.23.22

Stop BEZOS Act: Should Corporations be Taxed When Their Low-Wage Workers Use Federal Benefits? (S. 3410)

Do you support or oppose this bill?

What is S. 3410?

(Updated June 28, 2020)

This bill — known as the Stop BEZOS Act — would establish a corporate welfare tax on large employers equal to the amount of federal benefits received by their low-wage workers, so that if a worker of a large employer receives $300 dollars in food stamps, the employer would be taxed $300. It would also make it illegal for large employers with over 500 employees (including part-time workers, independent contractors, and franchise workers) to ask employees whether they qualify for federal benefits such as Supplemental Nutrition Assistance Program (SNAP), Medicaid, free- and reduced-cost school lunch program, and Section 8 housing.

The IRS — in consultation with the Dept. of Agriculture (USDA), Dept. of Housing and Urban Development (HUD), and Centers for Medicare and Medicaid (CMS) — would issue regulations as needed to administer the corporate welfare tax.

The bill’s full title is the Stop Bad Employers by Zeroing Out Subsidies (BEZOS) Act, named after Amazon founder and CEO Jeff Bezos.

Argument in favor

The disparity between large corporations’ executives’ pay and their employees’ hourly wages creates economic uncertainty for workers’ families and costs taxpayers money, as underpaid workers rely on welfare programs to make ends meet. Taxing corporations for the federal benefits employees use to make ends meet will either force wages up or bring revenue into the government to pay for these social services.

Argument opposed

This bill creates a powerful perverse incentive for companies not to hire poor, single, or minority people — pushing people who need any jobs they can get further down the economic ladder by forcing them into unemployment. Additionally, maintaining compliance with this bill will require a massive violation of employees’ privacy in order to determine what federal benefits they or their family members received.

Impact

Low-wage workers; companies with over 500 employees; Amazon; Walmart; McDonald’s; Burger King; USDA; HUD; CMS; and the IRS.

Cost of S. 3410

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sen. Bernie Sanders (I-VT) introduced this bill to give large, profitable corporations, such as Amazon and Walmart, a choice: pay workers a living wage, or pay for the public assistance programs low wage workers rely on. In his statement when introducing this bill with Rep. Ro Khanna (D-CA), Sen. Sanders said:

“At a time of massive income and wealth inequality, when the 3 wealthiest people in America own more wealth than the bottom 50 percent and when 52 percent of all new income goes to the top one percent, the American people are tired of subsidizing multi-billionaires who own some of the largest and most profitable corporations in America… This discussion is not just about Jeff Bezos and Amazon. The Walton family of Walmart is the wealthiest family in the country with a net worth of nearly $175 billion. This one family owns more wealth than the bottom 40% of Americans. Meanwhile, just like Amazon, Walmart pays its workers’ wages that are so inadequate that many of them are forced to depend upon public assistance programs in order to survive at a cost to taxpayers of some $6.2 billion each and every year… [This] legislation gives large, profitable employers a choice: Pay workers a living wage or pay for the public assistance programs their low-wage employees are forced to depend upon. Let us be very clear: We believe that the government has a moral responsibility to provide for the vulnerable – the children, the elderly, the sick and the disabled. But we do not believe that taxpayers should have to expend huge sums of money subsidizing profitable corporations owned by some of the wealthiest people in this country.”

This bill is opposed by the Center on Budget and Policy Priorities (CBPP) (the leading progressive source of policy analysis of poverty and social welfare programs), American Action Forum, Tax Policy Center, and the Foundation for Economic Education. CBPP founder Bob Greenstein wrote in his analysis of this bill that it could also result in corporations joining the anti-benefits fight, and added that there are better ways to create the changes that this bill seeks:

“[This legislation] is well-intentioned. It seeks to induce large firms to raise the wages they pay, which is an important goal after decades of stagnant or falling wages for millions of hard-working Americans. But the legislation likely won’t meet that goal, and it would have a series of adverse unintended consequences. Moreover, we have better ways to induce or require firms like Amazon and Walmart to raise their wages and bear more of the costs of core government functions, including basic nutrition assistance and health coverage for struggling families…. Among its problems, the legislation would create powerful incentives for employers to seek to minimize their hiring of workers who are in low-income families and, thus, more likely to qualify for Medicaid or nutrition or housing assistance… That’s likely to include workers with children (particularly single parents whose earnings often are lower than those of parents in married families) because families with children qualify for benefits like SNAP and Medicaid at considerably higher income levels than single workers. It’s also likely to include workers with significant health issues or disabilities, who are more likely to receive Medicaid and have high Medicaid costs, and workers of color and women, because without information about a worker’s family, the employer may assume that these workers are likelier to qualify for and participate in benefit programs. In addition, some employers might pressure employees not to sign up for Medicaid or other benefits. And elements of the business community would likely lobby policymakers to reduce their tax bills by restricting eligibility and benefits for core low-income programs, which would be equivalent to a corporate tax cut. Large corporations also could become leading opponents of efforts in states to adopt the Affordable Care Act’s Medicaid expansion, which, if adopted, would become a large new cost to firms under this bill.”

Dan McLaughlin, an attorney practicing securities and commercial litigation in New York City, and a contributing columnist at National Review Online, adds that this bill would require companies to violate employees’ privacy in order to remain compliant:

“The reality is that any plausible system of enforcement under legislation of this nature would in practice require big companies to ask a huge, new number of invasive questions of their employees in order to determine who is in their family or household and what federal benefits such people receive. And, by imposing costs on the company proportional to such benefits, it will strongly incentivize companies to find ways to avoid employing, say, single mothers who receive a lot of benefits. Preventing such discrimination, when the government is clobbering businesses over the head with economic reasons to engage in it, will require even further commitments of resources (And you know who doesn’t get federal welfare benefits? Offshore workers, and robots). To say nothing of the fact that audits of companies that employ a lot of people suspiciously not applying for federal welfare benefits would swiftly reveal companies that employ a lot of illegal immigrants (if you’re a liberal, just be thankful that nobody running the executive branch these days would think to do that). Any system of enforcement that tried to bypass the employer as information-gatherer would inevitably look like the e-verify system desired by immigration hawks.”

Amazon has declined to comment on this legislation, but objects to the underlying figures that Sen. Sanders cites, calling them “inaccurate and misleading.” Specifically, Amazon says that Sanders’ figure that “one of of three Amazon workers in Arizona and 2,400 in Pennsylvania and Ohio need food stamps in order to food their families includes temporary and part time workers. The company claims that workers using the SNAP food program either only worked for Amazon a short while, or chose to work part-time, and said that American full-time staff’s median salary was higher than Sen. Sanders indicated ($34,123 versus $28,446).

Amazon also touts the number of jobs it’s created in its warehouse, as well as its benefits package:

“Amazon is proud to have created over 130,000 new jobs last year alone. These are good jobs with highly competitive pay and full benefits. In the U.S., the average hourly wage for a full-time associate in our fulfillment centers, including cash, stock, and incentive bonuses, is over $15/hour before overtime. That’s in addition to our full benefits package that includes health, vision and dental insurance, retirement, generous parental leave, and skills training for in-demand jobs through our Career Choice program, which has over 16,000 participants.”


Media:

Summary by Lorelei Yang

(Photo Credit: Scott Lewis via Flickr / Creative Commons)