Republican Amendment Ensures No Tax Hikes on Small Businesses During Pandemic

Some Democrats Had Been Floating The Idea Of Passing A Minimum Wage Increase Via Reconciliation By Designing It As A Tax Hike On Businesses

“Democrats are attempting to pass the minimum wage boost through budget reconciliation, a quicker process that means they don’t need any Republican support for the bill…. Passing the legislation through reconciliation has drawn support from lawmakers such as Sen. Elizabeth Warren, D-Mass., and Sen. Bernie Sanders …” (“Democrats Want To Pass A $15 Minimum Wage Through Reconciliation. It’s Unclear If They Can,” CNBC, 2/01/2021)

• “Senator Bernie Sanders … is mounting an aggressive campaign ahead of what will be one of his first tests as chairman: securing the support needed to increase the federal minimum wage to $15 an hour by 2025 in a pandemic relief package.” (“Effort to Include $15 Minimum Wage in Relief Bill Poses Test for Democrats,” The New York Times, 1/31/2021)

“Democrats are discussing several ways to still approve the measures through reconciliation, including by crafting the minimum-wage increase as a tax against companies that don’t pay the wage, according to lawmakers and aides.” (“Democrats See Path to Biden’s Covid-19 Relief Bill Without GOP Help,” The Wall Street Journal, 1/26/2021)

But Today, All 100 Senators Voted Against Raising Taxes On Small Businesses During A Pandemic

SEN. MARCO RUBIO (R-FL): “Last Congress, as Chairman of the Senate Small Business Committee, I was proud to join with both Democrats and Republicans to provide more than $800 billion in federal funding to help our nation’s small businesses and the Americans they employ survive the COVID-19 pandemic… Today, Senators Tim Scott, James Lankford, and I are offering our colleagues a chance to once again prioritize our nation’s more than 30 million small businesses and their employees by committing to not increase taxes on them during a pandemic. It is clear that Democrats in Congress intend to pursue a radical agenda full of left-wing priorities, but it is common sense to ensure small businesses do not face tax hikes while they are struggling to keep their doors open during this public health crisis.” (Sen. Rubio, Press Release, 2/04/2021)

SEN. TIM SCOTT (R-SC): “Millions of small businesses have closed their doors during this pandemic, and thousands more are on the verge of shuttering… Our responsibility is to ensure these job creators keep their doors open and keep their employees paid. Raising taxes on small businesses would do the exact opposite and devastate Main Streets from Saluda to Springfield.” (Sen. Tim Scott, Press Release, 2/04/2021)

SEN. JAMES LANKFORD (R-OK): “The last thing small businesses need during the Covid pandemic is more uncertainty. Over the last year, Oklahoma’s small businesses faced several obstacles and have heeded the call to overcome shutdowns to protect our most vulnerable. A tax increase is the last thing they need right now. As we continue to rebuild our economy, we should encourage policies that promote jobs and reopening safely, not adding one more thing that threatens their survival.” (Sen. Lankford, Press Release, 2/04/2021)

All 100 senators voted for Sens. Marco Rubio (R-FL) and Tim Scott’s (R-SC) amendment opposing tax increases on small businesses during a pandemic. (S.Amdt. 69, S.Con.Res.5, Roll Call Vote #16: Amendment Agreed to 100-0: D 48-0; R 50-0; I 2-0, 2/04/2021)

The COVID-19 Pandemic Has Hit Small Businesses Particularly Hard And ‘The Pain For Many Small Businesses Is Only Increasing’

“In 1989 businesses with fewer than 100 employees accounted for 40% of the workers employed by all U.S. firms, according to the Census Bureau. Newly released data show that as of 2018 that had fallen to 33%. Now it is almost certainly even lower. Small-business transaction data collected by software and business-services provider Womply show that about 1 in 5 businesses that were open in January have stopped transacting entirely. Most of them have likely closed for good. In a recent survey of 6,325 small-business owners conducted by small business social-networking company Alignable, 42% of respondents said they were at risk of going out of business in the fourth quarter.” (“Covid Is Crushing Small Businesses. That’s Bad News for American Innovation,” The Wall Street Journal, 10/09/2020)

“Firms with fewer than 500 employees experienced higher job losses than big companies in the early days of the pandemic, then recovered more quickly from April to June, according to new data from the Bureau of Labor Statistics. But in recent months, the picture has changed again, with large companies posting stronger employment gains. The BLS data looks at employment through mid-November. The pain for many small businesses is only increasing as a new wave of Covid-19 cases sweeps the country and states reimpose or tighten restrictions. … Performing-arts companies, travel agents and bus operators are among the hardest-hit small businesses in the Covid-19 pandemic, according to the BLS study. … Employment loss due to business closure has been more than twice as high at small firms than large ones, though the BLS doesn’t currently know how many of those closures will be permanent. … Many small businesses foresee a bleak winter. More than 60% of small-business owners believe the worst of the pandemic is ahead, according to the MetLife & U.S. Chamber of Commerce Small Business Index.” (“For Small Firms, Covid-19 Cuts Deeper; ‘It’s Getting Worse Every Day’,” The Wall Street Journal, 12/19/2020)

• “Nearly 39% of small businesses reported that revenue declined in the second week of December, versus the prior week, up from fewer than 30% in early October, before Covid-19 cases jumped, according to the Census Bureau. More than 21% of small firms reported cutting hours, up from 14.5% in early October.” (“For Small Firms, Covid-19 Cuts Deeper; ‘It’s Getting Worse Every Day’,” The Wall Street Journal, 12/19/2020)

CBO Estimates With A $15 Minimum Wage Mandate, 1.3 Million Workers Would Be Out Of A Job

CONGRESSIONAL BUDGET OFFICE: “According to CBO’s median estimate, under the $15 option, 1.3 million workers who would otherwise be employed would be jobless in an average week in 2025.” (“The Effects on Employment and Family Income of Increasing the Federal Minimum Wage,” Congressional Budget Office, 7/08/2019)

‘More Than 37% Of Workers Who Earned The Federal Minimum Wage In 2019 Were Employed In Restaurants, Hotels And Other Parts Of The Hospitality Sector,’ While Last Year The Pandemic ‘Ravaged’ The Leisure And Hospitality Sector With 3.8 Million Workers Losing Their Jobs

“Opponents of a large [minimum wage] increase say policy makers should be especially concerned with job losses in low-wage industries, such as the leisure and hospitality sector, which shed 3.8 million jobs last year. More than 37% of workers who earned the federal minimum wage in 2019 were employed in restaurants, hotels and other parts of the hospitality sector, according to the Labor Department. Retail workers accounted for nearly 23% of minimum-wage earners, and education and health employees, including home health aides, represented 14%.” (“Biden Wants a $15 Minimum Wage. Here’s What People Say It Would Do to the Economy.,” The Wall Street Journal, 2/03/2021)

“The coronavirus pandemic has ravaged the hospitality, travel and retail industries since its outset in March, when shutdowns and restrictions meant to contain the virus cost more than 520,000 U.S. service workers their jobs. This workforce is under renewed pressure amid a resurgence in coronavirus cases: 498,000 leisure and hospitality jobs disappeared [in December], the Labor Department reported Friday. Restaurant and bar workers made up the bulk of those losses, roughly 3 in 4, an onslaught that disproportionately affected women and workers of color. Overall employment in the sector has fallen 23 percent during the pandemic, outpacing every other industry, federal data shows. With new rounds of state-mandated restaurant and bar restrictions, and winter weather limiting outdoor dining, food services accounted for 372,000 job losses in December. … Some 110,000 restaurants and bars — more than 1 in 6 across the country — have gone under since March. … Nearly 4 million leisure and hospitality jobs have been lost since February, a staggering blow to an industry that once had 15 million employees, economists said.” (“‘Shocked, Disheartened, Devastated’: Restaurant And Hotel Workers Reel As Layoffs Soar Again,” The Washington Post, 1/13/2021)