As we’ve previously discussed, a federally mandated ‘ABC test’ for workers would eliminate worker choice by forcing individuals who identify as independent contractors to become employees. This reclassification mandate would strip away the flexibility of contract work and up heave the livelihoods of millions of Americans.
A a recently released study commissioned by Americans for Tax Reform found that the imposition of a federal reclassification mandate would effectively serve as a tax hike on millions of Americans making less than $400,000 per year. This revelation means trouble for President Biden, who has profusely assured Americans that his administration will not raise taxes on those who make below this threshold.
The topline figures indicate:
- 56% of the independent contractors most likely to be reclassified would pay more in taxes as employees, an estimated 7.7 million taxpayers.
- 96%, or 7.5 million, of those reclassified taxpayers who would pay more in taxes make less than $400,000.
- Upwards of 33 million taxpayers could pay more in taxes if reclassified.
These numbers spell acute pain for Hispanic Americans, who often choose independent work in industries across the entire economy. Not only will a large number of these individuals have their taxes hiked, but small businesses that are unable to absorb the increased costs from hiring their contractors as employees will be forced to cut many of them from their payrolls.
Millions of American workers will find themselves with fewer opportunities, lower earning potential, and higher taxes if this provision finds its way into law.
