May 27 2020
Washington—Senator Dianne Feinstein (D-Calif.) released the following statement on the Paycheck Security Act, a bill introduced by Senators Mark R. Warner (D-Va.), Bernie Sanders (I-Vt.), Doug Jones (D-Ala.) and Richard Blumenthal (D-Conn.) to cover the wages and benefits of employees of affected businesses and nonprofits until the economic and public health crisis is resolved:
“Each day, more Americans are finding themselves out of work due to the coronavirus pandemic. That is why I’m proud to cosponsor the Paycheck Security Act to provide small businesses with a refundable tax credit to rehire and pay laid off or furloughed employees.
“With nearly 39 million workers filing new jobless claims since March, Congress must do more to help businesses make it through the crisis and rehire and pay their workers. Our bill would expand on the CARES Act, ensuring more businesses remain open and more Americans keep receiving paychecks and health care benefits until this crisis ends. Maintaining the connection between businesses and their workers will be key to helping America recover as quickly as possible once the virus is under control.”
The Paycheck Security Act would provide businesses experiencing significant financial hardship as a result of the coronavirus pandemic with a refundable tax credit to rehire and pay laid off and furloughed workers up to $90,000 per year, including health care benefits. It would also provide small and mid-sized businesses with the funds necessary to pay rent, mortgages, utilities and other operating costs until they can safely reopen and sales begin to recover.
Who is eligible for this program?
- All businesses that have experienced at least a 15 percent drop in revenues compared to the same quarter in 2019 would be eligible for a tax credit to cover payroll for laid off and furloughed employees.
- Eligible businesses with less than $45 million in gross receipts in 2019 would also be eligible for a credit of 5 percent of 2019 gross receipts to pay fixed operating costs such as rent, mortgages, utilities, and debt service.
- Sole proprietors with less than $1 million in gross receipts in 2019 would be eligible for an income credit of 30 percent of 2019 gross receipts, up to $75,000.
- This program would run until December 2020.
How will it secure worker paychecks?
- This legislation would substantially expand the Employee Retention Tax Credit established in the CARES Act to cover the wages, salaries and health care benefits up to $90,000 annualized for workers who have been laid off or furloughed.
What conditions apply to this program?
- Companies receiving funds through this program would have to commit to:
- Not buying back stock;
- Not paying out dividends;
- Protecting collective bargaining agreements;
- Staying neutral in union organizing efforts;
- Capping CEO compensation at 50 times the median wage of their workforce.
- The IRS would use the existing forms and mechanisms of the Employee Retention Tax Credit established in the CARES Act to carry out this program.
- The IRS would be instructed to prioritize the applications of businesses with fewer than 100 employees.
- The Treasury Inspector General for Tax Administration would oversee this program.
- The inspector general would disclose the names of the businesses that benefitted from this program and how many workers received a paycheck as a result of it.