Feb 26 2018
Tax Law Offers Incentive for Employers to Extend These Benefits
Much of the news about the new tax law has been focused on the wave of employee bonuses and wage raises affecting millions of Americans. These announcements from leading companies quickly grabbed headlines following the law’s enactment, delivering on the promise that the “Tax Cuts and Jobs Act” would put more money back into the pockets of working Americans.
Such good news is certainly welcome, and there is more of it to share, since the tax law is also working to help Americans keep more of their valuable time with loved ones. The “Tax Cuts and Jobs Act” contains a tax credit for employers to provide paid family and medical leave when employees need to address a serious health issue, care for an aging parent, or bring home a new baby. It marks the first time for the United States to have a family leave policy that is paid.
Tax Credit Has Popular Appeal
Unlike the “Family and Medical Leave Act,” which requires up to 12 weeks of unpaid leave, the new tax law’s provision is not a mandate on businesses but one that tries to make good business sense. Employers who take advantage of the provision will receive up to a 25 percent tax credit on what they pay toward employee leave. Moreover, by making the credit voluntary and creating a sliding scale that rewards even a partial wage replacement, the tax law recognizes the challenges faced by small businesses who simply cannot afford to give paid family and medical leave to every employee. The law seeks to help the lower-wage earners most likely to lack these benefits. The credit applies only if paid leave goes to employees earning less than $72,000.
The tax law’s approach has wide support beyond the halls of Congress and the White House. In a comprehensive study on paid leave released last year by the Pew Research Center, 87 percent of Americans said they would be in favor of using tax credits to incentivize these benefits. Paid family and medical leave also ranked high among the most desirable workplace benefits.
Tax Law Looks Out for Families
Those of us who voted for the tax law are encouraged by its inclusion of policies that serve the best interests of both American workers and American families. Tax cuts that allow workers to keep more of their take-home pay were not the law’s only win. Paid leave can be a game-changer for families struggling to pay their bills amid medical concerns. So could other family-friendly provisions in the law, such as the doubling of the Child Tax Credit and an expansion of 529 savings plans that would give parents more options when it comes to their child’s education.
The first tax reform law in a generation should make a big impact, one that goes far beyond the additional money that most employees have started to see in their paychecks. A modernized tax system is an opportunity to improve the ways in which Americans live and work, creating a positive environment that cultivates both economic growth and a high quality of life.