Roll Call! House Passes Payroll Tax to Fund Paid Family Leave (89-58), 2020
in the State House of Representatives on January 23, 2020, by a vote of 89-53 .
Purpose:To establish a new payroll tax on employees ($30 million annually) in order to fund a government-mandated Paid Family Leave program allowing employees to take up to 12 weeks of paid leave for the birth of a child, or 8 weeks for family care. . Analysis: This vote would establish a government-mandated insurance program. The program would be funded by a new employee payroll tax of 0.2%, on income up to $137,000. Employees can elect to pay an additional 0.38% of their wages to obtain medical leave of 6 weeks maximum. . While all Vermont employees would have their wages taxed, only employees who work at least 675 hours annually (13 hours a week) for a single employer would be eligible to receive the paid leave or to opt-in to the medical leave. A Vermont wage earner making the median income ($50k/year) would be taxed an additional $100 annually. Employers would have the option to pay some or all of the employee’s 0.2% wage tax. . JFO analysis indicates that employees who use the benefit would receive 90% of their weekly wages that are at or below the $13.26/hr Vermont Average Weekly Wage ($27,582/yr). They would get an additional 55% of their weekly wages that exceed the VAWW. For example, a worker making $20/hr ($41,601/yr) who uses the benefit would receive $625 weekly ($477 for their income qualifying as VAWW, plus $148). The maximum benefit would be capped at $1,334 per week. . In 2022, Vermonters are estimated to be taxed $30 million to pay for $25 million to Vermonters opting for birth and family leave according to Joint Fiscal Office analysis. In 2023, Vermonters are projected to pay less into the program than is needed to cover the cost: $30.8 million in taxes to fund $30.4 million in benefits, a 1.3% shortfall. The underfunding is projected to continue. . So, we can expect the tax (0.2%) and the price (0.38%) to increase in the future, with no hard cap set. . Those voting YES believe this program is a desirable benefit that will help retain and attract young families to Vermont. They argue the program must be mandatory or a lack of voluntary participation will drive up premium costs for those who do choose to enter the program. They believe Vermonters who would turn down coverage are too optimistic about their chances to never need coverage. The Legislature needs to override their lapse in judgement and force them to receive what’s in their best interest. . Those voting NO did so for many different reasons. Most of those voting “no” believe the bill has already gone too far and believe Vermont cannot afford another tax/entitlement program. Many of these “no” votes favor a bill for creating a program that would give Vermonters the option of paying into a program in order to obtain coverage. They may also fear the tax rates will have to rise to continue coverage. . A handful of legislators who voted “no” believe the bill did not go far enough. They hope to include more weeks of leave and mandatory, rather than voluntary, medical leave insurance. They hope to bring these items before another Committee of Conference with the Senate. . House Journal, Thursday, January 23, 2020. “Shall the report of Committee of Conference be adopted? was decided in the affirmative. Yeas, 89. Nays, 58.…” (Read the Journal, p. 7-44)