MOTORLINKS

The latest automotive innovation news

Senate bills would reward companies that pay higher wages, more benefits

4 min read

WASHINGTON — Two influential Senate Democrats, in the wake of General Motors’ plans to potentially idle four U.S. plants, want to offer incentives to U.S. corporations that invest in American workers and resist moving factories overseas.

On Friday, Sens. Sherrod Brown of Ohio and Richard Durbin of Illinois introduced legislation that would give tax credits to companies that provide higher wages and deeper benefit plans. Big companies that don’t pay well would get hit with a levy.

Democrats contend there has been a deterioration of the working class, while corporations and high-income households have prospered. The issue has influenced debates about trade, immigration, technology, health care and taxes.

President Donald Trump struck a chord with many voters in the 2016 election by saying he planned to look out for average Americans, but his trade policies so far have caused more pain for farmers and consumers, while tax and deregulatory efforts have mostly favored big business.

Democrats such as Brown, who is mulling a presidential bid, are demanding that corporations be more accountable to communities, especially after GM announced its restructuring plans in November.

“The President’s tax law rewards Wall Street and corporations that ship jobs overseas at the expense of American workers. These bills will put workers first and encourage companies to invest in good-paying American jobs,” Brown said in a statement.

How it works

Under the Patriot Employer Tax Credit Act, employers would receive a tax credit up to $1,500 per worker if they pay at least 90 percent of their work force about $15 per hour (slightly more than double the federal poverty rate), provide health care equivalent to the Affordable Care Act, maintain U.S. headquarters and maintain or increase the number of workers in the U.S. compared with overseas workers and independent contractors. Companies must also:

  • Provide 90 percent of nonhighly compensated U.S. employees a defined benefit plan or a defined contribution plan and contribute at least 5 percent of worker compensation.
  • Pay the difference between regular salary and military compensation for all National Guard and Reserve employees called for active duty and have a plan in place to recruit veterans.
  • Have a plan in place to recruit employees with disabilities.
  • Provide paid sick or family and medical leave to full-time employees.

The legislation also calls for a so-called Corporate Freeloader Fee. It would apply only to large corporations that file at least $100,000 in payroll taxes with the IRS daily for at least 180 straight days. The legislation levies a fee based on the number of employees at a company who earn less than 218 percent of the federal poverty rate for an individual. The fee increases as the percentage of a company’s work force that earns less than a living wage goes up. Companies can reduce fees by providing health care benefits and making contributions to employee retirement plans.

With Republicans in control of the Senate and so much focus on other partisan divides, the Durbin-Brown legislation faces an uphill road.

GM implications

A week ago, Brown hosted a group discussion at a local UAW hall with workers from GM’s Lordstown, Ohio, plant that will stop producing the Chevrolet Cruze by March 1, as he continues to press the automaker to identify new product to make there. Workers from Magna and Jamestown Industries, suppliers that could lose business because of GM’s decision, also attended.

“Today, on Martin Luther King Day, we need to remember Dr. King’s teachings on the dignity of work,” Brown said, according to a news release from his office. “He said to UAW workers that: ‘A society that performs miracles with machinery has the capacity to make some miracles for men if it values men as highly as it values machines.’ It’s time for GM to value the men and women, and the community making its machines.”

Last year, after GM ended the second shift at Lordstown and announced plans to build the new Chevrolet Blazer in Mexico, Brown introduced his American Cars, American Jobs Act, which would eliminate incentives for automakers to outsource production to low-wage countries.

The legislation would have temporarily granted customers a $3,500 discount when they buy vehicles made in America with at least 45 percent content from the U.S. and Canada. It also would have revoked a clause in the latest tax bill that lets some overseas profits be taxed at half the new corporate rate.

What do you think?