Flemming: Paid family leave hits an ethical snag

By David Flemming

Those Vermont legislators committed to paid family leave regardless of cost could soon be faced with an unenviable choice. They can either tax extremely low income earners who don’t earn enough to qualify for the benefit (you need to make over $11,000 annually to qualify), or they can exempt low income earners from the payroll tax that funds the program, and instead take an even bigger chunk out of the paychecks of Vermonters making more than $11,000 a year.

On April 17, the Senate General Committee heard testimony on the mandatory Paid Family Leave bill from Douglas Farnham, Director of Policy and Tax Department Economist at the Vermont Department of Taxes. Farnham suggested that Sen. Michael Sirotkin (D-Chittenden) and House members who voted for the bill had overlooked the plight of those who don’t have a high enough income to qualify for Paid Family Leave, but would be forced to pay into program anyway.

Senator Sirotkin asked Farnham, “The people who don’t qualify right now, is that a very small number? The threshold ($11,000/year) is very low.” Sirotkin seemed skeptical that paid family leave might not be affordable for some Vermonters.

Farnham’s response was far from reassuring. “We have a large number of low income Vermonters in Vermont. The data is a little bit difficult to get at, because we don’t know their hours and their annual earnings.” Since hours worked may go into determining how much you pay per paycheck, the lack of this information should throw up warning signs to legislators.

Vermont’s Comprehensive Annual Financial Report (CAFR), states that there are 110,024 tax filers who report less than $10,000 a year in income. This is 29.63% of all tax filers. In other words, about a third of all those who earn income in Vermont, and the poorest third at that, will be disqualified from participating the Paid Family Leave program while simultaneously being forced to fund it.

Farnham went on to say that exempting extremely low income workers from the tax would be “extraordinarily complicated.” Meaning that if a revised bill were to include a low-income exemption, the 0.55% payroll tax estimate for everyone else will be even higher, as will be the cost of the bureaucracy necessary to monitor and implement the program.

Wasn’t the purpose of making the program mandatory to generate cost savings? Anything that is “extraordinarily complicated” won’t come cheap.

Given how untenable a low income exemption for paying into paid family leave would be, Farnham concluded by saying that “I have no recommendation for a way to insulate low-income workers from the program.” If Vermont has to harm the poorest among us to pay for a program, that should be more than enough reason to reject a mandatory paid family leave program.

Paid leave advocates are faced with two options that would harm Vermonters in different ways. But there is a third option: reject paid family leave. Recognize that even the nicest sounding legislative “solutions” often harm those they intend to help.

David Flemming is a policy analyst for the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Flickr/401kcalculator.org
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11 thoughts on “Flemming: Paid family leave hits an ethical snag

  1. Another ill conceived piece of legislation.
    Along with min wage and legalization of marijuana. The left just cannot help themselves.

  2. The bureaucrat and the politicians are quibbling over irrelevant data. It is said that there are “110,024 tax filers who report less than $10,000 a year in income”. And how many of these are retired folks living off Social Security, a little bit of interest income, and zero earned income(?) – probably accounts for 90% of the 110 thousand. The Social Security income fails to reach the taxable threshold so their taxable income is the little bit and they fall into the under $10,000 bracket.

    An accurate analysis of the questions raised requires knowledge of earned income, not taxable income. But the people involved in the decision making are too stupid to understand this.

  3. Appears to me the ONLY sane option would be to abandon this idiotic plan. In the first place the hard working people of this state DO NOT need another tax burden since we are already the highest taxed state in the nation. In the second place I can only classify this program as another addition to WELFARE. It stinks of SOCIALISM. #802VTALLIANCE

  4. Unbelievable- this is how entitlements end up out of control. Because the Progressives are rushing to get their benefit programs in place they fail the “due diligence” exercise. So these 110,000 low income get exempted from paying- the rate increases for the rest of us. After one year when they are in the hole because they did not anticipate the benefits properly, who gets to pay the required additional rate?
    Right- you and I because “paid family leave is important regardless of cost”.
    Legislators- time to wrap it up and go home before we are all broke.

  5. If the majority of the legislators did not have a problem with the morality of the potential of a term minus one-minute baby being murdered, then this issue won’t make a dent in their version of morality.

  6. Exposing yet again another reason why despite having one of the highest minimum wages in the country and the world……..current Vermont leadership makes it impossible for people to get on the first rung of America’s ladder to success.

    The DNC lemmings have zero concern for the poor, they want to profit off them, have job security for KEEPING them poor!

    This is yet another classic reason why Vermonters needlessly struggle.

  7. “Recognize that even the nicest sounding legislative “solutions” often harm those they intend to help.” The progressives will never learn that lesson. They should have learned it with the welfare program, the abuse of the food stamp program, public housing, Obamacare, etc. etc.
    Liberalism is most definitely a mental defect.

  8. “regardless of cost could”

    That could pretty much surmise the Leftist fascist agenda driven session.
    carbon tax “regardless of cost”
    15phr “regardless of cost”
    inspections/car and house “regardless of cost”
    education/indoctrination “regardless of cost”
    Prop tax “regardless of cost”

    They could just change it to regardless of effect on citizen and it works as well.
    Flatlander Agenda swhat it’s all about. Nothing more nothing less.

  9. Once Progressive Socialism is fully implemented, it won’t matter how high the taxes are because the government will supply everything the people need and it will be absolutely free. And we’ll all be equal. Except for the Ruling Elite.

    • “…The. government will supply everything the people need …”. No, the government will supply everything they decide the people will need.

  10. Paid leave another Liberal boondoggle, they don’t care who it hurts as long as they
    get their agenda passed as it makes them feel good !!

    Hold your politicians accountable, they’ll learn.

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