Business & Economy

House panel passes scaled-back version of paid family leave

The House’s tax-writing committee passed a scaled-back version of a paid family leave insurance bill in a 7-4 vote Thursday

The House Ways and Means Committee endorsed H.196 after defeating an amendment to study the issue and significantly scaling back the original proposal the House General, Housing and Military Affairs Committee passed in March.

That version would have provided eligible workers with 12 weeks a year of paid parental, family or disability leave. All Vermont workers would have paid a 0.93 percent payroll tax to fund the program.

Janet Ancel
Rep. Janet Ancel, D-Calais, is chair of the House Ways and Means Committee. File photo by Elizabeth Hewitt/VTDigger
Workers would have made claims under the program to the Department of Labor, which would collect the taxes and administer the program similarly to unemployment insurance. That version of the bill would have reimbursed workers 100 percent of their wages, up to the equivalent of about $52,000 a year, for the 12-week leave period.

The new bill would provide six weeks of parental or family leave — not disability leave — and be funded through a 0.141 percent payroll tax on workers’ first $150,000 of wages. Employees would have only 80 percent of their wages replaced, not 100 percent.

The Department of Labor would still administer the program.

“We know it’s good for families,” Rep. Janet Ancel, D-Calais, the committee chair, said of paid family and parental leave. “We believe it’s good for business. We think it’s a good economic development strategy, frankly to support young families.”

“There are so many things about it that just make good policy sense, and the amount of revenue that we need to raise and the percentage of wages that people need to pay in to participate is really quite modest given the benefit,” Ancel said.

Ancel said the committee purposefully set aside the disability issue from the bill. She said House General’s bill would have confined use of the disability benefit to people who were seriously ill; she prefers to have a short-term disability benefit for people who are unable to perform their jobs.

“Some of us on the committee think there ought to be a stronger disability program, but that will just have to come separately,” Ancel said. “We don’t want you to be dying (to qualify for the benefit). We just want you to be unable to do your job.”

Rep. Cynthia Browning, D-Arlington, who often votes with Republicans, called the new version of the bill “vastly better” than House General’s proposal. She still voted against the new language.

“It’s a mandatory program,” Browning said. “A lot of people will pay into this, pay payroll taxes for years and never require it. I just really don’t think this is the right way to do it.”

She criticized the committee for not modeling how the state could fund parental leave in other ways, such as from an income tax or savings in another part of the state’s general fund.

She said if there are 6,000 babies born in the state every year, the state could pay $2,000 to each new mother at a cost of just $12 million a year. “Those possibilities were never modeled,” she said. “They were never considered. The committee was always committed to a mandatory payroll tax.”

Rep. Kurt Wright, R-Burlington, said his issue is having people pay into the program who never need to use it. He said that while that’s the nature of any insurance program, he does not support it.

“I grew up in a low-income family … in a single-parent household, and I know that even in our circumstances, I know that my mother struggled every week to have enough money to put food on the table and everything else,” Wright said.

“While I’m sympathetic to people needing that benefit, I’m also sympathetic to taking money out of people’s pockets,” Wright said. “I’d like to have it be optional or at least opt-out for people so people can actually make their own decision.”

H.196 is not on track to become law this year. If the bill gets out of the House, it will go over to the Senate, which could decide whether to take it up in 2018.

H.196 will go to the House Appropriations Committee before moving to the House floor for a full vote.

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  • Edward Letourneau

    So now senior citizens who have to take a job to pay their taxes, are now going to be taxed more for the benefit of other people. No wonder people in other states think Vermont is overrun with corruption.

    • Robert Lehmert

      “The new bill would provide six weeks of parental or family leave — not disability leave — and be funded through a 0.141 percent payroll tax on workers’ first $150,000 of wages. Employees would have only 80 percent of their wages replaced, not 100 percent.”

      I know everything seems to be a problem, but sometimes you are forced to take responsibility for your own situation. Certainly that would apply for a working “senior” whose spouse requires care, but who needs the income from a job they’ll lose if they care for the spouse. That’s an impossible choice.

      I’m surprised that a tax of $1.41 per $1,000 of wages causes you concern.

    • DougHoffer

      Perspective. While all expenses matter for low-income folks, this program would cost $2.50 per month for someone working FT at minimum wage. I can’t say if this is the best way to fund the program, but it’s pretty cheap insurance.

  • Adam Maxwell

    Funny. I was told Vermont politics was dominated by progressives and liberals. This smacks of narrow minded conservative thinking. Only taxing half a percent up to ~$150k?!! Golly gosh, we sure wouldn’t want to inconvenience rich folk! What if they had to sell their lake houses? Or buy a Lexus instead of a Mercedes? The sky would fall!

    The US has shown it won’t behave like a civilized country and recognize that progressive taxation and the provision of services the market is incapable of providing (Health care, paid leave, etc) is an economic and social good. Vermont doesn’t have to be hamstrung by the barbarity of US economic ideology. We can and should be the grown up in the room and stop letting horse-and-buggy economists convince us that taking care of one another is beyond reach.

  • Mark Heyman

    It’s important to note that we must sometimes share the burdens of others. While some individuals will not have the need for parental leave and may have philosophical objections to “paying for others,” we need to remember there are costs to us all when some are left without ANY support, whether it’s Unemployment, Health (or any other) Insurance and certainly the difficulty of not being able to support oneself following the birth or adoption of a child.

    Head’s Up: I’m not going to respond to the inevitable replies, comments, etc. that I am just another Tax & Spend liberal out to destroy Vermont. I believe in the above, but I’m no fan of higher & higher taxes… We need to be smart and make sure any new tax is something that can be absorbed and is worthwhile. How do we do that? We put the numbers out there and not let soundbite politics create false equivalencies that “all tax increases are alike” (and therefore are ALL inherently bad, to be fought against tooth & nail, etc.). So let’s look at the numbers that might help Vermonters understand what it might take to join the majority of the economically developed world in providing some form of Paid Family Leave.

    Here are the numbers, based on the above .141%. Before everyone says this is bad, take into account the actual tax you & others will end up paying, broken down on an annualized to daily basis, then make an argument as to whether you support or don’t. I looked at the numbers and am in support. Totally understand those who object, but only if the argument is made with an understanding of what the actual individual costs are going to be. Debate on!

    Salary Annual Tax Monthly Weekly Daily

    $ 25,000 $ 35.25 $ 2.94 $ 0.68 $ 0.10
    $ 30,000 $ 42.30 $ 3.53 $ 0.81 $ 0.12
    $ 35,000 $ 49.35 $ 4.11 $ 0.95 $ 0.14
    $ 40,000 $ 56.40 $ 4.70 $ 1.08 $ 0.15
    $ 45,000 $ 63.45 $ 5.29 $ 1.22 $ 0.17
    $ 50,000 $ 70.50 $ 5.88 $ 1.36 $ 0.19
    $ 55,000 $ 77.55 $ 6.46 $ 1.49 $ 0.21
    $ 60,000 $ 84.60 $ 7.05 $ 1.63 $ 0.23
    $ 65,000 $ 91.65 $ 7.64 $ 1.76 $ 0.25
    $ 70,000 $ 98.70 $ 8.23 $ 1.90 $ 0.27
    $ 75,000 $ 105.75 $ 8.81 $ 2.03 $ 0.29
    $ 80,000 $ 112.80 $ 9.40 $ 2.17 $ 0.31
    $ 85,000 $ 119.85 $ 9.99 $ 2.30 $ 0.33
    $ 90,000 $ 126.90 $ 10.58 $ 2.44 $ 0.35
    $ 95,000 $ 133.95 $ 11.16 $ 2.58 $ 0.37
    $ 100,000 $ 141.00 $ 11.75 $ 2.71 $ 0.39
    $ 105,000 $ 148.05 $ 12.34 $ 2.85 $ 0.41
    $ 110,000 $ 155.10 $ 12.93 $ 2.98 $ 0.43
    $ 115,000 $ 162.15 $ 13.51 $ 3.12 $ 0.45
    $ 120,000 $ 169.20 $ 14.10 $ 3.25 $ 0.46
    $ 125,000 $ 176.25 $ 14.69 $ 3.39 $ 0.48
    $ 130,000 $ 183.30 $ 15.28 $ 3.53 $ 0.50
    $ 135,000 $ 190.35 $ 15.86 $ 3.66 $ 0.52
    $ 140,000 $ 197.40 $ 16.45 $ 3.80 $ 0.54
    $ 145,000 $ 204.45 $ 17.04 $ 3.93 $ 0.56
    $ 150,000 $ 211.50 $ 17.63 $ 4.07 $ 0.58

  • wendywilton

    I like Rep. Browning’s idea about parental leave and how it could be funded without a payroll tax.

  • James Rude

    Frank Herbert and the economist Friedrich Hayek had a couple of great quotes that I think applies to people like Rep. Janet Ancel, D-Calais and others like her when they make statements like: “We believe it’s good for business. We think it’s a good economic development strategy, frankly to support young families.”

    “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” Friedrich Hayek

    “The people I distrust most are those who want to improve our lives but have only one course of action.”

    Frank Herbert

  • Deborah Wright

    So all employees in VT will pay for a few employees to take 6 weeks of family leave?Ridiculous! Get a grip legislature. Perhaps only you folks should be taxed to pay for this instead of the other hardworking people of VT

  • Tim Vincent

    $55K gross income will be taxed for $770.
    Surely, anyone making the yuuuge sum of $55k can easily afford a “mere” $770.
    People get the government they deserve.

    • Elizabeth Bohn Scharf

      I think it’s $77. Multiply $55,000 by 0.0014 which is “0.14 percent” in the words of the article. $550 would be 1% and they reduced it from .93% to .14% which frankly doesn’t seem like it would cover a 6 week 80%paid leave which would be used not just by parents but by children of aging parents, too.

    • David Zuckerman

      I believe the math is closer to $77. Whether that is what you would support or not it is important that readers think about it with accurate numbers. That $77 would mean about $5000 in “insurance” for the 6 weeks renumeration.

      • Tim Vincent

        Then there is a misprint in the article and should be printed .00141 not .0141

  • Cheryl Ganley

    I have been fiscally responsible and provide my own nest egg if I should need it. Since others are unable or unwilling I now have to pay for them? This is a program that should be 100% voluntary as most will not use it. Nevertheless, have we not learned enough from social security? When there is this pot of money sitting there not being used do you really feel the legislature won’t feel like skimming some off the top? Maybe throw a few IOU’s in there and then just raise the wage withholding to make up for it. This is just a round about way of another tax disguised as a benefit (for select individuals).

  • JustinTurco

    I guess I need to move to Florida. How do we stop these people from continuing to suck the common man for more and more. Then of course they want to make public bathrooms gender neutral. I’ll go find a car in the parking lot to pee behind. And of course soon we will be able to legally get stoned. Maybe if I get high enough I won’t care who is next to my daughter in the next stall over when she heads to the bathroom. Our legislators are completely out to lunch. Thanks for passing this information on Vermont Digger. Very disappointing though.

  • Lisa Liotta

    I’d love to see the fine print on this bill — who qualifies for the benefit? It seems logical that if compensation is based on wages, then you must be working in order to receive the benefit. Our state has an enormous number of seasonal and temporary workers, who it seems will ALL pay into this. But, what happens if they need the leave when they’re between winter/summer employment? What if they work part-time? How long does one need to be employed in order to qualify?
    * If seasonal and part-time people are paying in, but cannot qualify, then it seems like that the bill essentially means that a whole lot of Vermonters who have little or no benefits and low job stability will be subsidizing people who likely already have far better benefits because they are already full-time and not part of the seasonal work force.
    I could be wrong.