I absolutely love this idea: The Bad Boss Tax

[Scuba]

http://billmoyers.com/2014/07/21/the-bad-boss-tax/

The Bad Boss Tax
July 21, 2014
by Sarah Jaffe


TakeAction Minnesota, a network that promotes economic and racial justice in the state, wants to make that fee a reality. It’s developing the framework for a bill that it hopes will be introduced in 2015 by state legislators who have worked with the network in the past. As conceived, the “bad business fee” legislation would require companies to disclose how many of their employees are receiving public assistance from the state or federal government. Companies would then pay a fine based on the de facto subsidies they receive by externalizing labor costs onto taxpayers.

TakeAction Minnesota’s plan is one prong of a larger national effort. As progressive organizations grapple with how to turn years of public outrage over income inequality into policies for structural change, a network of labor and community organizing groups has seized upon the bad business fee as a solution that might take off.

...

Just how much money are low-wage businesses draining from local, state and federal coffers? A study released in April by Americans for Tax Fairness, a coalition of more than 400 organizations that advocate progressive tax reform, estimated that Wal-Mart alone costs taxpayers $6.2 billion annually in public assistance. That report draws from a 2013 study by the Democratic staff of the US House Committee on Education and the Workforce, which estimated that Wal-Mart cost taxpayers, on average, between $3,015 and $5,815 per worker. For a hypothetical 300-person Wal-Mart Supercenter in Wisconsin, that added up to as much as $1.75 million in public subsidies per year. Those taxpayer dollars come in the form of joint federal-state programs such as Medicaid and the School Breakfast Program, as well as federal ones such as the National School Lunch Program, the Section 8 Housing Program, the Earned Income Tax, Low Income Home Energy Assistance and the Supplemental Nutrition Assistance Program (SNAP, also known as food stamps).

Americans for Tax Fairness used the House Democrats’ study to extrapolate Wal-Mart’s public-assistance burden on each state. In Minnesota, for example, where Wal-Mart has 20,997 employees, the public burden totaled $92.7 million per year. That’s $92.7 million Wal-Mart isn’t paying in wages or benefits, but that instead is being borne by taxpayers — taxpayers who, of course, include Wal-Mart workers.

Emphasis mine.

[WillyT]

1. K & R !!!

[Erich Bloodaxe BSN]

2. Oh Hell Yeah!

Make it a fine of something like 1.1 times the amount the government has to spend on your employees, so that the 'best business decision' is simply to pay employees enough that you don't ever pay the 'bad boss tax'.

[Half-Century Man]

10. Make it gradually hurt more.

1.1 the first year, 1.3 the second year, 1.5 the third year, and 47.9 the forth year; cause at that point, the company is just fucken with people for amusement.

[BlancheSplanchnik]

17. .

[The Magistrate]

3. An Excellent Idea, Sir

[truebluegreen]

4. Great idea!

Simply making all of this public would help, but applying a Bad Business label and sticking 'em with a fine is even better.

I'd like to see it applied to companies who out-source jobs and off-shore profits too, though I'm not sure how to do that.

[Brigid]

5. I love it!

At last, a workable idea to deal with the "Wal-Mart problem!"

[Sherman A1]

6. Superb!

Excellent idea!

[abelenkpe]

7. Please do that in CA nt

[KamaAina]

68. My sentiments exactly.

[BrotherIvan]

8. This should be federal.

Businesses are making money off of the absolute worst business models. Mostly because they don't want to pay a fair wage or benefits.

[OneAngryDemocrat]

9. TOTALLY AWESOME

Bumped for that reason alone.

https://www.facebook.com/groups/RockfordSOL

[colsohlibgal]

11. Tax Them Big Time

Go after them! Greed is not good.

[woo me with science]

12. Another great thread!

You win DU tonight, Scuba. These are great articles!

K&R

[secondvariety]

13. Works for me.

Great idea.

[GeorgeGist]

14. I'm pretty sure SCOTUS™ will have none of it.

[Jackpine Radical]

15. And maybe make them incorporate some sort of Scarlet Letter into their logo

until they've straightened out their game.

[BlancheSplanchnik]

16. YES!

Common sense.

[supercats]

18. Great Idea...

But it's only a great idea which means absolutely nothing...unless it gets implemented!

[JDPriestly]

19. K&R. Brilliant idea. Fair to the best bosses who pay living wages.

[Phlem]

20. Someone needs to fix the rec button.

I can only click it once.

[rickyhall]

21. Real numbers makes income inequality harder to deny

It also a makes a good case for my belief that billionaire's are THIEVES.

[Jenoch]

22. While I believe this 'bad boss tax' might be helpful in taising wages

I believe it would also be helpful to create jobs where workers who are skilled and educated are needed and thus command a higher wage. There are too many people who are willing to take a menial job with a low wage because those jobs are more plentiful.

I recently saw a TV news story about a manufacturing plant where they are making wood canoe paddles that are better than anything else on the market. The tips of the paddles are made of Kevlar® for durability. The employees of this manufacturing firm are making good wages with good benefits. Small businesses employ many more people than even Walmart.

[HCE SuiGeneris]

23. knr

[ReasonableToo]

24. +++

[grahamhgreen]

25. Makes sense. What do Hillary supporters say?

[Uncle Joe]

26. Kicked and recommended.

Thanks for the thread, Scuba.

[Enthusiast]

27. Kicked and recommended!

Thanks, Scuba. This is an interesting proposal.

[possiblylogical]

28. Bad Idea

Think about the people who are most likely to receive public funds. These will be the people who will have greater problems finding employment. Companies will be less likely to hire people who could be single mothers.

[Scuba]

29. Any sources to back up your claim, or is this just your opinion?

By the way, most public funds go to profitable corporations, not the needy.

[possiblylogical]

32. Common sense.

If you charge companies based on how many people they have on welfare programs they are going to be less willing to hire those on welfare programs. They will switch to hiring groups, such as students, that are less likely to be on these programs. Inevitably it will end up hurting the people that need it the most.

It would be much less problematic just to raise the minimum wage.

[Scuba]

33. So it's just your opinion. Got it.

[possiblylogical]

35. Does anything I say seem incorrect?

Some policies have unintended consequences. At the end of the day, what is most important is that a policy accomplishes its objectives. Here your objective is (presumably) to decrease the number of people on government assistance. You want to ensure that your policy actually accomplishes its objective.

[Scuba]

37. Yes.

[possiblylogical]

41. May I ask what?

[Scuba]

46. Do you think these corporations aren't already hiring the cheapest labor they can find?

[possiblylogical]

47. But the people that are more reliant on welfare are no longer the cheapest labor.

Their effective cost to the company has increased and, as a result, the company will look to other options. If those that are reliant on welfare go from costing the firm $10/h to costing the firm $12/h, the firm will now find it worthwhile to find workers are less likely to be on public assistance. They might have to pay a little more to find someone that is not on public assistance, but it would be better than paying the additional tax.

(Also, technically they are hiring the workers that are the most profitable. They care about both productivity and wage.)

[Scuba]

50. The problem here is employers shifting their costs to the taxpayers. There needs to be a penalty ..

... for doing so.

[possiblylogical]

53. Why are you so concerned about penalizing companies?

If the policy ends up hurting many of those currently on government assistance, would it be worth it? If it made people slightly better off, but at a large cost, would it be worth it.

Unless the policy that penalizes companies is the best policy for helping those in need, by focusing penalizing companies, you lose the opportunity to introduce policies that would better help people in need. It's more important to think about policies that benefit people.

[Scuba]

57. Perhaps "penalizing" is a poor choice of words on my part. What the law really does ...

... is force them to absorb all their own costs instead of shifting them to taxpayers.

Please see my post #56 for more.

[Abq_Sarah]

67. I'm not sure why it's the company's "cost"

Employees aren't children.

You can't base pay on what any particular employee needs to be above the federal poverty guidelines. To use the extreme example, an employee with 8 dependents would require an hourly wage of $20.00 to barely exceed the poverty level. And what about part time employees? Are they included as well?

[Scuba]

69. Presumably the law would take into account things like different sized families.

I believe the bottom line is that anyone working full time should not need to be on public assistance, which is different than saying that wages should be sufficient to also provide for all their dependents.

[Lee-Lee]

76. How would you make that work?

"Wakes should be sufficient to provide for all their dependents"

How exactly would you make that happen?

What if a woman has 6 kids, and suddenly her husband who did have a great job becomes ill and unable to work?

Now she is supporting 7 people where before she didn't have to work at all, so she isn't big on job history or skills.

(The above is a real works example I know)

Should an employer be penalized for hiring her unless they pay her enough for 7 people to live on?

[Scuba]

77. I wouldn't. Please re-read my post.

[possiblylogical]

88. So then why not use a minimum wage?

This is the most direct way to solve your problem without the adverse incentives.

[joeglow3]

45. This is how intellectual discussions work

That is an interesting point that I had not thought of. Your claim that we need a study commissioned before something can be discussed or considered is insulting and naive. Your attempt to dismiss an idea out of hand because said study doesn't exist makes it clear you cannot find fault with the logic so you are trying to simply discredit it to avoid discussion.

A more prudent approach would be to discuss the possibility of the scenario and how it can be avoided. If you think it is not a possibility, then discuss why.

[possiblylogical]

48. Taking steps to avoiding discrimination would be a mess.

You are basically giving people the incentive to discriminate and then telling them not to. This is problematic in and of itself because people will try to work around the law. This inevitably means there has to be an enforcement mechanism, and the costs associated with it.

Then there is a question of how you would actually structure the law to avoid having discrimination. These types of things are never easy. Different industries and different locations generally have different types of workers. Would you insist that every company had to have an even number of people from every relevant demographic? If you would, it would be a mess.

If you do not use quotas, then you allow the employers to use tricks that help them determine whether someone is likely to use public assistance. They can use tricks such as statistically discriminating by overemphasizing job characteristics that are relevant to employment and give an indication that the employee is less likely to use public assistance. These types of things are hard to challenge legally.

If the goal is to get people off of public assistance, why not just raise the minimum wage? It would avoid all of this mess.

[Scuba]

49. We'd better repeal all laws then, if people are just going to work around them.

I'm all for raising the minimum wage, but note that the current proposals being discussed ($10.10/hour) is not enough to get folks off of public assistance. There needs to be a mechanism to penalize employers that shift their costs to the taxpayers. So far, this is the best I've seen.

[possiblylogical]

51. No. When designing rules and regulations, we should make sure to consider incentives.

Here you are willingly introducing adverse incentives when there are other policy choices available.

This notion that there needs to be a mechanism to punish employers should up for debate. If you look at the countries that generally do a good job of providing social services, the governments typically provide service like health care. More generally, they put institutions in place that generate higher wages and the government takes care of whatever needs are left unmet. This model seems to work quite well.

I don't really understand, why should you focus on the specific employees circumstance when deciding on whether a wage is appropriate. Should employers be looking at an individual's circumstances when setting a wage? Should they be paying people who would otherwise need public funding a higher amount than everyone else?

[Scuba]

56. Your argument seems to be ....

... ignoring the fact that there are huge "adverse incentives" in place right now. To argue that the law should not be passed because some would remain seems disengenuous.

No law is perfect, and no doubt some employers would find a way to try to game any new law. But the enormous incentive employers now have to shift costs to taxpayers would be greatly mitigated, if not gone altogether. Remember, employment discrimination on the basis of marital status, age and such is now prohibited. Employers would have to break existing laws to a) even learn that a candidate might be eligible for public assistance and b) base hiring decisions on such factors.

You seem totally focused on the law potentially providing some new "adverse incentives" while totally discounting the very real - and very large - ones that exist now.

[Lee-Lee]

78. In the real world...

While discrimination in hiring is prohibited, unless it is provable it isn't actionable.

Employers still discriminate today, all the time, but are just smarter about it.

They won't ask about your status on assistance. They will instead look at your social media posts, your address and how it looks on street view, how many people appear to live there, and then will decide how likely you may be to be on assistance and go from there.

Employers are tricky. I know one that has security watching the cameras when they have people coming, and they note does the person arrive early? Late? Then when they are interviewing somebody else goes out and actually looks at the car- tags in date? Neat or messy inside? Bumper stickers? An employer worried about somebody being on assistance can also look and see if there is a child seat or toys in the car- that coupled with no wedding ring means quite likely a single parent, that would be viewed as a risk category. Of course this would never be stated as the reason, so proving the discrimination would be very hard.

[Scuba]

79. In the real world, employers are shifting billions in costs to the taxpayers. Want to fix it?

[Lee-Lee]

80. Sure I want to fix it

But not in a way that makes people on assistance or more likely to use assistance less desirable to employ.

Not in a way that requires an employer to know if an employee uses assistance and will serve to further stigmatize the employee for using benefits.

Just because I see flaws in one proposed way doesn't mean I don't want to see the problem addressed.

[Lyric]

84. This could work brilliantly IF you also make it illegal to ask

whether or not your employees receive public assistance of any kind. Make it so that they can't ask either their current employees or their prospective employees about that, and this could certainly be effective. I like it!

[possiblylogical]

86. When people apply for jobs they reveal information about themselves through the application process.

By the time an interviews are done, an employer will be able to determine the candidates' ages, levels of education, and histories of past employment. The employer can also make inferences about whether the people are likely to have certain characteristics based on how they behave in an interview. If they dress poorly or talk in a nonstandard dialect, they are statistically more likely to use public assistance. People will pick up on these cues and will use them to sort between people who are likely to need public assistance.

There are also steps an employer can take to decrease the probability that their employees are not on social assistance. The employer can post vacancies in a way that reduces the number of people applying that are likely to be on assistance. The employer can also change their policies to be less accommodating to people that are on assistance, perhaps doing things like being less accommodating to people who need a large number of sick days to care for their children.

[possiblylogical]

87. My argument is that there is really no reason to use this method as a solution to the problem..

... and good reasons not to.

Regardless of what you think, devising laws to get around adverse incentives is very difficult. This is part of the reason why that Affordable Care Act is so long. Private provision of health care has so many perverse incentives that, in order to make health care more universal and still maintain markets, you need a complicated set of rules. The major problem with your suggestion is that you are introducing a set of rules that create adverse incentives when there are other policies that don't introduce these incentives.

Raising the minimum wage would have the same types of benefits without the adverse incentives. If you don't want to increase the minimum wage, a "low wage" tax would accomplish roughly the same thing as the policy you suggest without creating the incentives to discriminate.

There also are other smaller issues with what you suggest. There is the costs of implementing the policy. You would need to develop mechanisms to determine how much assistance each employee receives. Then, you would have to develop a mechanism for charging the companies for these costs. Finally, you would have the costs of dealing with all the adverse incentive that the tax creates. Alternatively, increasing the minimum wage and applying a low wage tax can be done fairly easily.

You policy would also disproportionately affect locations that have higher rates of poverty. Over time, businesses in less well-off locations go out of business and new companies would be more reluctant to replace them. This would cause business to move to locations that are more affluent. This problem would not exist if you increase minimum wage or introduced a "low wage" tax.

Finally, raising the cost of employment will lead to more unemployment and discouraged workers. This is also true of a minimum wage increase and a low wage tax; however, when changing the minimum wage the outcome is more certain. Policy makers are more likely to consider the effect of wage increase on unemployed and will be less likely to make bad decisions.

[Lee-Lee]

30. The unintended consequence- if you get assistance don't apply

That is what it will turn in to.

McDonalds won't suddenly start paying $15 an hour, they will just stop hiring that single mom trying to work her way out of poverty and hire that kid who wants some spending money but lives at home with mom and dad.

Wal-Mart will start hiring more retirees and young kids who live at home, single people with no kids and married people whose spouse has enough income to keep them off assistance, and won't hire that struggling single mom who has 3 kids and even at $15 an hours would probably still qualify for some assistance programs.

You have to look at it from the way these people think. Employee on assistance costs you more now? You don't help them off assistance in their world, you hire employees who won't be using the programs so they cost you less.

[Scuba]

59. Please see my post #56, particularly the part on hiring discrimination.

[badtoworse]

31. I like this idea. Once in a while, we agree on an issue.

[TBF]

34. I don't care how we re-distribute it -

we just need to do it. This is as good as any other way.

[DirkGently]

36. Be better if they gave the money to the workers, though. n/t

[Indydem]

38. Chicken or the egg?

We, as progressives, push and support assistance for those in need. We set an arbitrary bar for receiving assistance, and we use the public coffers to support those in need.

Employers, seeing that their low-wage, part time employees will receive assistance, feel no need or obligation to support them with higher wages, benefits, or more hours.

So, which causes which? Do employers short change their workers because they feel no obligation to support them, knowing that they will be subsidized by the government, OR does the government need to subsidize low wage workers because employers won't pay their employees a decent wage.

[Scuba]

39. I think this one's obvious. The corporations don't care if the workers get taxpayer help ....

... they'd pay them shit wages regardless.

[Indydem]

40. I'm not entirely sure about that.

If you couldn't afford to eat and/or feed your family, and there were no assistance, why would you take the job? Just to partially feed your family, or feel like you are doing something? I doubt that.

I think that they would be forced to pay a living wage to attract any employees at all.

I don't know. I just have a feeling that having a safety net makes corporations thing they should force their employees to use it.

[possiblylogical]

43. If you look at developing countries,

there is a tendency for employers to fire their workers once they get sick or injured. Their workers also live off less than the average American worker receiving public assistance.

[salin]

70. I could be wrong... but it is a relatively recent phenomenon

It used to be companies budgeted what they could afford to pay matching with need. If the profit wasn't big enough to support the business, it was a business plan issue. Companies did not used to factor in public assistance as a means of subsidizing payrolls. It was shocking when it became mainstream news that Walmart was doing this circa 2000.

And Walmart was doing it to increase already outsized profits. Now - it has become a relatively common practice (and obscene, imo). It isn't about businesses not being able to afford more - at least not those the size of walmart. It is about corporate greed and a corporate and civic culture that is no longer shocked and now accepts this "business model" as acceptable.

[MrScorpio]

42. Sweetness! nt

[joeglow3]

44. Why didn't democrats fix the minimum wage when they controlled the whole government?

They could have increased the minimum wage and indexed it to inflation, eliminating the issue altogether. Of course, they would lose their ability to bring the issue up every few years and get their base fired up as this thread shows.

Hmmmmm. Is it possible they DON'T want to solve the issue??????

Edit to add, thank God for liberal states. However, I don't hold a glimmer of hope that the current national party gives two shits about something like this.

[jmowreader]

62. When did Democrats control the whole government well enough to do that?

Quick reminder: In the short period of time between Obama taking office and Ted Kennedy dying, we were saddled with both Joe Lieberman and a minority that will filibuster a motion to order pizzas.

[joeglow3]

72. That is a cop out and you know it

Democrats won't even float this idea, but will push for raising the minimum wage. Why do YOU think they don't float the idea to index it to inflation?

[JaneyVee]

73. Facts are a cop out? Where am I?

[jmowreader]

75. The idea of a bullshit Bad Boss Tax?

First things first: I have no idea why the Democrats won't propose indexing the minimum wage to inflation, except that maybe they just don't want to give the Republicans ANOTHER thing to campaign against them on. You know the spiel: This JOB KILLING regulation...

The Modern Day Republican is so bad and so consistent, if the stripe in the middle of the road was still white and Obama suggested changing it to yellow, the GOP would claim this idea would cost 300,000 workers in the White Road Paint Manufacturing Industry their jobs...and then they'd all go straight to church and pray like hell no one figures out the people who make white road paint also make yellow, or that there ain't but 200,000 paint manufacturing workers in the whole land. Can you dig it?

There's a very good reason this idea sucks: Do you really want your boss to crawl THAT FAR up your ass? Do you want her to keep a list on a clipboard of all her subordinates who are on the forms of public assistance that will kick in the Bad Boss Tax, so that the next time sales drop by five percent she knows exactly who to lay off permanently? Do you want employers to pass around a map overlay of the low-rent districts so they can plot the addresses of anyone applying for a job? "Ol' Joe here would be perfect but he lives in an area that's got a 73-percent WIC participation rate, so I think Ol' Joe here should apply at someone else's company." Do you want "failure to disclose all forms of public assistance received immediately upon approval" to become a termination-level offense?

Y'know, I get the strange feeling that changing all the refundable tax credits for business that exist in the tax code to non-refundable credits would pay for all public assistance programs. And right now y'all are going "huh?" I shall explain. There are two broad categories of tax loopholes: deductions and credits. A deduction directly alters your taxable income, which indirectly changes your taxes. At the 35-percent corporate flat rate, a $100 deduction reduces your taxes by $35. A credit directly alters your taxes - a $100 credit lowers your taxes by $100. There are two kinds of credits, nonrefundable and refundable. If you can take advantage of a nonrefundable credit, the most it can lower your taxes to is zero. If you owe the government $1 million in taxes before the credits are applied, and you have a $2 million credit, it stops working when you stop owing the government anything. Refundable credits bring you money after your tax bill falls to zero.

[MoonchildCA]

52. I sooo love this idea.

I hope it passes and sets a precedent for other states.

[navarth]

54. kicking because I love the idea nt

[GusBob]

55. This thread was just promoted on the Thomas Hartmann radio show

[myrna minx]

58. K&R n/t

[clarice]

60. Where would the demarcation line of low wage/fair wage be drawn...and who would decide that ?nt

[Scuba]

61. From what I can gather it would be based on a wage that still leave the employee ...

... eligible for public assistance. That said, I'm not privy to the details of the proposal.

[clarice]

63. Just seems like there is a lot of grey area. nt

[valerief]

64. So would the fine equal the subsidies or be something like .0005% of the subsidies?

You know, would it just be another phony fine like energy company fines?

[TygrBright]

65. This. Is. Brilliant. n/t

[annabanana]

66. The real welfare cheats...

Stealing from the pockets of every taxpayer.

[They_Live]

71. K & R

This is a perfect idea.

[PatrickforO]

74. This is a GREAT idea!

I'm so sick of using my tax dollars to subsidize the payroll of corporations that pay subsistence wages I could hurl. I think I'm going to write my Senators and Representative and tell them I'd like to see a national bill like this!

My Representative is Cory Gardner. You know what he'll do?

[delphi72]

81. Why Not...

just eliminate the middle man and levy a tax on every corporation that amounts to a pro-rated amount that corresponds to a company's size related to corporate earnings?

[Jefferson23]

82. How awesome an idea is that! K&R

[redstatebluegirl]

83. Walmart will be history in Minnesota!

I have been volunteering at a food pantry in town, I see people I know work at Walmart almost full time (up to 35 hours a week). It makes them uncomfortable to come in saying they work, they are not lazy. Of course not! Their employer is a bad boss!

[L0oniX]

85. The pay outs for CEO's, top management and stock dividends are the reason...

they squeeze the bottom line workers. Find a way to tax them more and stop their loop holes. Overt part time employment is another way they cheat the system. Need to penalize that too.

[RiffRandell]

89. Me Too!

I'm sure it still is, but years ago the local paper did a story on how Wal-Mart employees were #1 on the list of enrollments in the state funded Peachcare, which provides health insurance to poor kids, Wal-Mart won't provide the parents with decent health insurance.

Huge K&R! Thanks Scuba!