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Peralta: Stop the insanity, repeal min. wage tax credit

Sen. Jose Peralta, D-Jackson Heights, introduced legislation to repeal the Minimum Wage Tax Credit included in the state budget as part of the minimum wage hike to $9 per hour by 2016. The credit, available to all employers including mega corporations like Walmart and McDonalds, would reimburse employers up to $1.35 an hour for all workers they employ between the age of 16 and 19 and would cost the state an estimated $20 million to $40 million with no spending cap. Employers would only quality if they pay the exact minimum wage. Photo by AP.
April 15, 2013
New York state Sen. Jose Peralta, D-Jackson Heights, has responded to what editorial writers have called "economic insanity" and introduced legislation to repeal the Minimum Wage Reimbursement Credit approved by the state Legislature during the budget process.

Peralta's legislation (S.4500) — "an act to repeal certain provisions of the tax law relating to the minimum wage reimbursement credit"— was referred to the Investigations and Government Operations committee on April 3. There is no same-as bill in the Assembly.

The pro-business tax credit came along as an incentive with the minimum wage increase to $9 an hour by 2016, which was included in the state budget and was intended to lessen the burden of labor costs on employers. Instead, it is being portrayed as a new additional cost for taxpayers, some critics say.

"Call it corporate welfare or just plain nuts, we shouldn't fork over so much as a dime of tax money to a multinational titan to help it pay for a small, gradual bump up in the minimum wage," Peralta said in an April 11 press release announcing his legislation.

"That the tax break incentivizes discrimination against older workers and caps wages for teens at the minimum breaks the stupid meter," he said.

Peralta is fighting against an estimated $20 million to $40 million expenditure to corporations by state taxpayers as an incentive to employ youths between the ages of 16 and 19.

Critics are angry over the notion of pitting adult workers against young workers, especially when it was reported by the Fiscal Policy Institute that "although 90 percent of the lowest-wage New York workers are 20 years of age or older, this new tax credit will dangle $1,560 to $2,808 out in front of employers for every adult worker they manage to substitute with a student."

The catch is that to be eligible for the credit employers cannot exceed the minimum wage, which as a result has created the state's first maximum wage for teenagers, some say.

Another criticism of the minimum wage tax credit is that there is no cap on the amount of the credit that can be allocated to companies and no company is excluded, yet "the cost of the Youth Works program is capped at $25 million for the first two years and at $6 million in subsequent years," according to the FPI and service workers who earn tips were excluded from the wage hike all together.

The FPI reports that although disclosure requirements are not clarified, Walmart alone will receive an estimated $53 million to $85 million over the next five years.

Peralta's bill also addresses the fear of many advocates who believe employers will fire adults to hire young workers so they can reap the benefits of the credit.

Although it would be illegal to do so, Peralta's bill states that there is no protection for fired workers, since in order to defend themselves, workers would have to: know about the tax break, know about the law, know they were fired to be replaced by an eligible teenager, provide proof that they were fired because of the employers desire to access the credit, and have the time to wait for the case to be resolved within an "overburdened, underfunded system," according to the bill's justification.

Anti-poverty advocates such as Hunger Action Network Executive Director Mark Dunlea said anything less than $9 per hour with indexing is a "defeat," and Assembly Democrats had pushed for an immediate bump in the minimum wage.

Stuart Applebaum, president of the Retail, Wholesale and Department Store Union, said, "We are incredibly disappointed in the creation of a dangerous tax credit which subsidizes the minimum wage increase for larger retailers like Walmart at a time when there are substantial funding cuts to essential services."

Peralta's bill states, "This is a bad and destructive piece of policy and a waste of taxpayer dollars."

  1. print email
    Min. wage Tax Credit
    April 22, 2013 | 12:07 PM

    Well, It appears that our representatives in Albany are passing legislation at a furious pace...without any idea what is in it. Perhaps if we did these things during daylight hours...and using the correct process, these kind of mis-steps would not be made.

    Don F.
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