Workers need help, but ‘Stop BEZOS Act’ won’t do it

By all means, let’s raise the living standards of workers at Amazon, Walmart, McDonald’s and other employers of lowwage Americans.

And by all means, let’s raise Jeffrey P. Bezos’s taxes, too. The founder of Amazon is the wealthiest man in the world. He didn’t need the tax cut Republicans just gave people like him.

But the sloppily designed Stop Bad Employers by Zeroing Out Subsidies Act (aka, ahem, the “Stop BEZOS Act”) is a terrible way to do either of these things. It’s virtually guaranteed to hurt the very low-income working families its sponsors want to help.

The bill, introduced last week by Sen. Bernie Sanders, I-Vt., and Rep. Ro Khanna, D-Fremont, would establish a “corporate welfare tax” on firms with at least 500 employees. Companies would pay a tax equal to 100 percent of the value of safety-net benefits their employees receive, including Medicaid, housing subsidies, food stamps and subsidized school lunches.

That means, for instance, that if Medicaid shelled out $15,000 to pay the health bills of a Walmart employee, Walmart’s taxes would rise by $15,000.

“The working families and middle class of this country should not have to subsidize the wealthiest people in the United States of America,” Sanders said. “That’s what a rigged economy is all about.”

Which sounds like a reasonable complaint. Big companies and the wealthy aren’t paying their fair share in taxes. But the Sanders-Khanna prescription just creates powerful new incentives for companies to shaft the most powerless workers.

The bill would discourage firms from hiring low-skilled workers. That’s a given. But worse, it would discourage them from hiring workers suspected of

drawing benefits. These workers come, disproportionately, from some of the most vulnerable populations: families with children, older people and workers with disabilities.

Why would families with children be at risk?

Some of the safety-net benefits included in the bill, such as subsidized school lunches, apply only to children. But workers with children are also more likely to qualify for those that don’t, such as food stamps. That’s because benefit eligibility is determined by a person’s wage and also total household income and household size.

Now imagine if Stop BEZOS were on the books. For a job that pays $20,000, which kind of worker might employers avoid?

Under this bill, Medicaideligible workers with disabilities or other health issues would become thousands of dollars more expensive. Working-age people over 45, who cost Medicaid about twice as much as their younger counterparts, might face even more discrimination in the job market.

The bill tries to address these issues by barring employers from asking job candidates about benefits. But firms could easily infer which applicants are more likely to get them, based on their races, genders, ZIP codes.

In response to all of this, workers might reasonably choose to forgo benefits that they or their children need in hopes of scoring more job security. Or, because the proposal is tied to a firm’s size, companies could choose to contract out even more of their low-wage work — a phenomenon associated with reduced wages for lowskilled workers.

Perhaps worst of all, as the Center on Budget and Policy Priorities points out, the bill would create a new corporate constituency to push for cuts to social programs and stricter eligibility requirements. Reductions to Medicaid or school lunches would be directly equivalent to a corporate tax cut.

If you want to help workers, there are lots of alternatives less likely to backfire than this. Raise the minimum wage. Eliminate noncompete clauses. Increase other kinds of benefits (such as paid family leave). Make it easier for workers to unionize. Of course, these proposals need to be designed carefully, too, to make sure they help more workers than they hurt.

Incentives matter. No number of strident news conferences vilifying billionaires and big corporations will ever change that.