At a hearing on Wednesday, a top Democrat on the House Education & Workforce Committee admitted that Biden’s proposed rule on independent contracting will raise taxes on working Americans.
Congresswoman Alma Adams (D-N.C.), who serves as Ranking Member on the Workforce Protections Subcommittee and who has served as Assistant Whip for the Democratic Caucus, made the remarks at a subcommittee hearing entitled “Examining Biden’s War on Independent Contractors.”
Ranking Member Adams argued that by exercising their right to identify as independent contractors, workers are “depriving our government of billions of dollars in badly needed tax revenue that could be spent,” indicating that the Biden administration’s plan to forcibly reclassify millions of freelancers will result in those workers being charged higher taxes.
“Finally, worker misclassification harms our economy by depriving our government of billions of dollars in badly needed tax revenue that could be spent on improving our communities. The reality is that the misclassification of workers as independent contractors is a pervasive problem for workers, law-abiding businesses, taxpayers, and our economy. And this is why the Biden administration has proposed a responsible rule to fix this problem. Committee Democrats strongly support this proposed rule.”
The Biden Department of Labor (DOL) in 2022 proposed new rulemaking to restrict the ability for workers to classify themselves as independent contractors, instead forcing them to identify as W-2 employees or lose their work entirely. Biden and congressional Democrats had first attempted to pass the radical “Protecting the Right to Organize” (PRO) Act through Congress but decided to ram through the regulations via executive fiat when support for their legislation failed to materialize.
The rule aims to force millions of Americans out of their current work arrangements by implementing criteria similar to the vague “ABC test” featured in the PRO Act. This ABC test proved damaging and unworkable when it was included at the state level in California’s AB 5, championed by current Biden DOL nominee Julie Su.
Congresswoman Adams’s admission follows earlier findings from a study commissioned by Americans for Tax Reform and the Tholos Foundation, which showed that imposing an “ABC test”-style regulation on a nationwide basis would raise taxes on millions of working Americans. The study found that 56 percent of the independent contractors who are forcibly reclassified would end up paying higher taxes than before. Furthermore, 96 percent of those who would see their taxes increase––approximately 7.5 million workers––earn less than $400,000 per year, once again violating President Biden’s pledge to not raise taxes on anyone earning less than that amount.
Americans for Tax Reform submitted comments to the Department of Labor opposing this proposed rule, which Democrats now admit is a Trojan horse for increasing taxes on the average American.