Family leave tax credit added to latest GOP tax bill

Republicans have added a tax credit to a modified version of the Senate tax bill, which aims to incentivize businesses to offer paid family and medical leave. 

Senate Finance Committee Chairman Orrin Hatch (R-Utah) included in his “modified mark” a proposal from Sen. Deb Fischer (R-Neb.) to give businesses offering full-time employees at least two weeks of paid family and medical leave each year a general business credit equal to 12.5 percent of the amount of wages they pay an employee if the employee is getting at least 50 percent of their normal wages.

The tax credit increases by 0.25 percent for every percentage point the employer pays beyond the 50 percent wage replacement. The tax credit, however, maxes out at 25 percent.

“This is a big step toward enacting the first nationwide paid leave policy in U.S. history,” Fischer said in a statement.

“For the four years I’ve been working on this plan, my goal has always been to balance the workplace challenges of employers with the needs of 21st-century working men and women.”

To qualify, employees have to have been employed by the employer for one year or more and earn less than the 60 percent of the compensation threshold for highly compensated employees, which an aide to Fischer said equals $72,000.

But advocates for working families say the proposal won’t help the people who need it most.

“Paid leave is certainly urgent and needed, but the devil is in the details and these details are devilish,” said Ellen Bravo, co-executive director of Family Values @ Work. “We see this as another tax giveaway to big corporations.”

Bravo said the proposal doesn’t address the reality that small businesses can’t offer paid leave on their own with or without a tax credit. And nothing in the proposal, she notes, requires the paid leave program to be new. 

The credit, she said, would then be going to companies already offering paid leave. 

“If they can afford to do it, they don’t need your tax money and other people’s tax money to make that happen,” she said, adding that it won’t make a difference for employers who could afford to offer paid leave but won’t.  

“Dressing it up as paid leave because you know it’s politically popular doesn’t transform it into something that can work,” she said. “It’s too little money that will reach too few people and certainly not the ones that need it the most.”

Bravo is instead pushing social insurance proposals like Sen. Kirsten Gillibrand’s (D-N.Y.) Family and Medical Insurance Leave Act. The bill would pool small contributions from employers and employees, which workers could draw wages from for paid family and medical leave.