II 

116TH CONGRESS 

1ST SESSION S. 219 

To amend the Internal Revenue Code of 1986 to impose an excise tax 

on employers with low-wage employees. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 24, 2019 

Mr. BROWN (for himself and Mr. DURBIN) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to impose 

an excise tax on employers with low-wage employees. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Corporate Freeloader 

5 Fee Act’’. 

6 SEC. 2. IMPOSITION OF EXCISE TAX ON CORPORATIONS 

7 WITH LOW-WAGE EMPLOYEES. 

8 (a) IN GENERAL.—Subtitle D of the Internal Rev9 enue Code of 1986 is amended by adding after chapter 

10 36 the following new chapter: 


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1 ‘‘CHAPTER 37—CORPORATE 

2 RESPONSIBILITY TAX 

‘‘Sec. 4511. Imposition of tax. 

3 ‘‘SEC. 4511. IMPOSITION OF TAX. 

4 ‘‘(a) IN GENERAL.—In the case of an applicable em5 ployer who employs a low-wage employee during the cal6 endar year, there is imposed a tax equal to the applicable 

7 percentage of the aggregate amount of wages paid by the 

8 applicable employer with respect to employment of all em9 ployees of the employer during the calendar year. 

10 ‘‘(b) APPLICABLE EMPLOYER; LOW-WAGE EM11 PLOYEE.—For purposes of this section— 

12 ‘‘(1) APPLICABLE EMPLOYER.— 

13 ‘‘(A) IN GENERAL.—The term ‘applicable 

14 employer’ means, with respect to any calendar 

15 year, any employer who was required to make 

16 deposits of taxes under chapters 21 and 24 (or 

17 who would have been required to make such de18 posits if the rules of subparagraph (C) applied 

19 for such purposes) by the close of the next day 

20 for periods aggregating more than 180 days 

21 during the preceding calendar year. 

22 ‘‘(B) EXCEPTION.—Such term shall not in23 clude a Federal or other governmental entity or 


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1 a church or qualified church organization (as 

2 such terms are defined in section 3121(w)(3)). 

3 ‘‘(C) AGGREGATION RULES.—The rules of 

4 subsections (b), (c), (m), and (o) of section 414 

5 shall apply for purposes of this section, except 

6 that in applying subsections (b) and (c) of such 

7 section, the phrase ‘more than 50 percent’ shall 

8 be substituted for the phrase ‘more than 80 

9 percent’ each place it appears. 

10 ‘‘(2) LOW-WAGE EMPLOYEE.— 

11 ‘‘(A) IN GENERAL.—The term ‘low-wage 

12 employee’ means any employee who receives 

13 wages from an applicable employer during the 

14 calendar year in an amount less than 218 per15 cent of the Federal poverty line (within the 

16 meaning of section 2110(c)(5) of the Social Se17 curity Act) for an individual. Rules similar to 

18 the rules of section 36B(d)(3)(B) shall apply 

19 for purposes of this subparagraph. 

20 ‘‘(B) EMPLOYEES EMPLOYED FOR LESS

21 THAN ENTIRE YEAR.—In the case of any em22 ployee employed by an applicable taxpayer for 

23 less than the entire calendar year, the amount 

24 described in subparagraph (A) shall be reduced 


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1 by an amount which bears the same ratio to 

2 such amount as— 

3 ‘‘(i) the number of weeks during the 

4 calendar year in which such individual was 

5 not an employee of such applicable em6 ployer, bears to 

7 ‘‘(ii) 52. 

8 ‘‘(c) APPLICABLE PERCENTAGE.—For purposes of 

9 subsection (a)— 

10 ‘‘(1) IN GENERAL.— 

11 ‘‘(A) DETERMINATION.—The applicable 

12 percentage shall be determined as follows: 

‘‘In the case of an applicable employer with a low-wage 

employee ratio of: 

The applicable 

percentage is: 

25 percent or less ....................................................................... 25 percent

Greater than 25 percent, but not greater than 50 percent ........ 50 percent

Greater than 50 percent, but not greater than 75 percent ........ 75 percent

Greater than 75 percent ............................................................. 100 percent. 

13 ‘‘(B) LOW-WAGE EMPLOYEE RATIO.—For 

14 purposes of subparagraph (A), the low-wage 

15 employee ratio with respect to any applicable 

16 employer is the ratio (expressed as a percent17 age) of— 

18 ‘‘(i) the number of low-wage employ19 ees employed by the applicable employer 

20 during the calendar year, to 


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1 ‘‘(ii) the total number of individuals 

2 employed by the applicable employer dur3 ing such calendar year. 

4 ‘‘(2) HEALTH AND RETIREMENT OFFSET.— 

5 ‘‘(A) IN GENERAL.—In the case of an ap6 plicable employer who meets the requirements 

7 of subparagraph (B), the applicable percentage 

8 shall be reduced (but not below zero) by 25 per9 centage points. 

10 ‘‘(B) REQUIREMENTS.—An applicable em11 ployer meets the requirements of this subpara12 graph if such applicable employer— 

13 ‘‘(i) offers to all full-time low-wage 

14 employees (and their spouse and depend15 ents) the opportunity to enroll for all 

16 months during the calendar year in min17 imum essential coverage under an eligible 

18 employer sponsored health plan (as defined 

19 in section 5000A(f)(2)) for which— 

20 ‘‘(I) the plan’s share of the al21 lowed costs of benefits provided under 

22 the plan is not less than 60 percent of 

23 such costs, and 

24 ‘‘(II) the required contribution 

25 (within the meaning of section 


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1 5000A(e)(1)(B)) of the employee does 

2 not exceed the applicable percentage 

3 of the annual wages paid to the em4 ployee by the applicable employer, and 

5 ‘‘(ii) meets the retirement plan re6 quirements of subsection (d) for all em7 ployees who are low-wage employees. 

8 For purposes of clause (i)(II), the applicable 

9 percentage is the percentage in effect under 

10 section 36B(b)(2)(B)(ii) for the plan year. 

11 ‘‘(d) RETIREMENT PLAN REQUIREMENTS.— 

12 ‘‘(1) IN GENERAL.—The requirements of this 

13 subsection are met for any calendar year with re14 spect to an employee of the applicable employer who 

15 is a low-wage employee if the employee is eligible to 

16 participate in one or more applicable eligible retire17 ment plans maintained by the applicable employer 

18 (or any member of the group of employers treated 

19 as an applicable employer under subsection 

20 (b)(1)(C)) for a plan year ending with or within the 

21 calendar year. 

22 ‘‘(2) APPLICABLE ELIGIBLE RETIREMENT

23 PLAN.—For purposes of this subsection, the term 

24 ‘applicable eligible retirement plan’ means an eligible 


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1 retirement plan which, with respect to the plan year 

2 described in paragraph (1), is either— 

3 ‘‘(A) a defined contribution plan which re4 quires the employer to make nonelective con5 tributions of at least 5 percent of the com6 pensation of the employee, or 

7 ‘‘(B) a defined benefit plan— 

8 ‘‘(i) with respect to which the accrued 

9 benefit of the employee derived from em10 ployer contributions, when expressed as an 

11 annual retirement benefit, is not less than 

12 the product of— 

13 ‘‘(I) the lesser of 2 percent multi14 plied by the employee’s years of serv15 ice (determined under the rules of 

16 paragraphs (4), (5), and (6) of section 

17 411(a)) with the employer or 20 per18 cent, multiplied by 

19 ‘‘(II) the employee’s final average 

20 pay, or 

21 ‘‘(ii) which is an applicable defined 

22 benefit plan (as defined in section 

23 411(a)(13)(B))— 

24 ‘‘(I) which meets the interest 

25 credit requirements of section 


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1 411(b)(5)(B)(i) with respect to the 

2 plan year, and 

3 ‘‘(II) under which the employee 

4 receives a pay credit for the plan year 

5 which is not less than 5 percent of 

6 compensation. 

7 ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 

8 purposes of this subsection— 

9 ‘‘(A) ELIGIBLE RETIREMENT PLAN.—The 

10 term ‘eligible retirement plan’ has the meaning 

11 given such term by section 402(c)(8)(B), except 

12 that in the case of an account or annuity de13 scribed in clause (i) or (ii) thereof, such term 

14 shall only include an account or annuity which 

15 is a simplified employee pension (as defined in 

16 section 408(k)). 

17 ‘‘(B) FINAL AVERAGE PAY.—For purposes 

18 of paragraph (2)(B)(i)(II), final average pay 

19 shall be determined using the period of consecu20 tive years (not exceeding 5) during which the 

21 employee had the greatest compensation from 

22 the applicable employer. 

23 ‘‘(C) ALTERNATIVE PLAN DESIGNS.—The 

24 Secretary may prescribe regulations for an ap25 plicable employer to meet the requirements of 


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1 this subsection through a combination of de2 fined contribution plans or defined benefit plans 

3 described in paragraph (1) or through a com4 bination of both such types of plans. 

5 ‘‘(D) PLANS MUST MEET REQUIREMENTS

6 WITHOUT TAKING INTO ACCOUNT SOCIAL SECU7 RITY AND SIMILAR CONTRIBUTIONS AND BENE8 FITS.—A rule similar to the rule of section 

9 416(e) shall apply. 

10 ‘‘(E) CERTAIN EMPLOYEES MAY BE EX11 CLUDED.—For purposes of paragraph 

12 (2)(B)(ii), an employer shall not be treated as 

13 failing to meet the requirements of this sub14 section with respect to employees— 

15 ‘‘(i) who have not attained the age of 

16 21 before the close of a plan year, 

17 ‘‘(ii) who have less than 1 year of 

18 service with the employer as of any day 

19 during the plan year, 

20 ‘‘(iii) who are covered under an agree21 ment which the Secretary of Labor finds to 

22 be a collective bargaining agreement if 

23 there is evidence that the benefits covered 

24 under the plan were the subject of good 


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1 faith bargaining between employee rep2 resentatives and the employer, or 

3 ‘‘(iv) who are described in section 

4 410(b)(3)(C) (relating to nonresident 

5 aliens working outside the United States). 

6 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur7 poses of this section— 

8 ‘‘(1) WAGES.—The term ‘wages’ has the mean9 ing given such term by section 3121(a) (determined 

10 without regard to any dollar limitation contained in 

11 such section). 

12 ‘‘(2) ALLOCATION OF TAX.—The Secretary 

13 shall prescribe such rules as necessary for the alloca14 tion of the tax imposed by subsection (a) among dif15 ferent entities treated as a single employer under 

16 subsection (b)(1)(C).’’. 

17 (b) CONFORMING AMENDMENT.—The table of chap18 ters of the Internal Revenue Code of 1986 is amended by 

19 inserting after the item relating to chapter 36 the fol20 lowing new item: 

‘‘CHAPTER 37—CORPORATE RESPONSIBILITY TAX’’. 

21 (c) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to calendar years beginning after 

23 the date of the enactment of this Act. 

Æ 


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