Low-Wage Tax Penalty Risks Sparking Contract Labor Boom

A Democratic plan to slap tax penalties on companies with too many low paid workers would drive larger firms to outsource more of their labor unless Senate Finance Chairman Ron Wyden can plug potential holes in his plan, economists warned.

Wyden’s proposal would impose a 5% penalty on a corporation’s payroll for paying wages below a yet-to-be-specificed threshold. It’s an alternative to the $15 minimum wage hike shot down by the Senate parliamentarian. Democrats are running against the clock as they push to pass a pandemic relief bill by mid-March.

Wyden said in a statement Friday that ...