Congress's Tax Bill and Paid Leave

85% of American workers do not have paid family leave through their employers. For employees with new children, sick family members or individual health issues, this lack in paid leave policies is detrimental. The United States needs a national plan for paid family leave.

Before passing the House version of the tax bill this month, the GOP added a revision to the legislation that includes a paid family leave tax credit. The Senate has confirmed that their version, which is still in progress, will include this addition as well. The tax credit would return a small percent, between 12.5% and 20%, of an employee’s wages to any company offering at least two weeks of paid leave to its employees.

While this appears beneficial in improving the U.S.’s paid leave issues, advocates for paid leave are not satisfied. The provision offers a minimal level of help to employee’s who need paid leave. Vicki Shabo, Vice President for Workplace Policies and Strategies at the National Partnership for Women & Families, says, “What that practically means is a very small amount of money, 12.5 percent to 25 percent of the employee’s wages, at the end of the year as a tax return for too little time off.”

With the tax credits too low, employers could potentially assume 85% of an employee’s paid leave. The bar for the amount of paid leave is also too low, a 10-week difference compared to the Family and Medical Leave Act’s required 12-week leave standard.

The provision is also not comprehensive, as employers could receive these tax credits for providing leave for just one family or medical reason that people qualify for, rather than covering all reasons. This could result in excluding older workers, workers with sick family members, or workers with serious health issues.

Moreover, the tax credits designed to promote social policies have historically failed in the past. The amount of returned money is simply too low for businesses to enact new policies, and the incentive expires after two years.

While the fact that the issue is being addressed in the GOP’s legislation is a step in the right direction in the fight for paid leave, it is important that lawmakers do not stop here. The proposed tax credits would still leave many Americans behind regarding paid leave, and the need for a comprehensive national plan is still essential.