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A graduated employer excise tax that works for everyone
Unlike flat-rate proposals, this approach creates smooth incentives. The tax rate increases as the gap between wages paid and living wage widens, giving employers a clear path to reduce their liability.
Minor gap, wage within 15% of living wage
Moderate gap, wage at 70-85% of living wage
Severe gap, wage at 50-70% of living wage
Critical gap, paying less than half of living wage
These figures describe the scale of the problem, not projected tax revenue. This proposal has not been scored by CBO or the Joint Committee on Taxation. Revenue depends entirely on how employers respond, and the design goal is $0 revenue: every covered employer paying a living wage, with no tax owed.
Pass through reconciliation, establish IRS reporting requirements, employer notification period
Tax applies at 50% of full rate, employer compliance period, adjustment support
Full tax rates in effect, first revenue collections, program evaluation begins
Assess impact on wages, employment, and revenue; adjust thresholds as needed
Employers choose their response: raise wages, pay the tax, or find efficiencies. No government mandates on business operations.
As a tax measure, this can pass through budget reconciliation, bypassing the filibuster that has blocked wage increases.
Conservatives see elimination of corporate subsidies; progressives see path to higher wages. Both get fiscal responsibility.
“We don't need to agree on the ideal minimum wage to agree that taxpayers shouldn't subsidize profitable corporations.”
This proposal needs public support to become reality. Here's how you can help.
Help others understand the hidden subsidy of poverty wages ($152.8 billion per year in Berkeley's 2009-2011 accounting) and what we can do about it.
“The question isn't whether workers deserve living wages. It's whether taxpayers should subsidize companies that refuse to pay them.”