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.

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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.