A moderate paid leave policy made quiet progress this week, as a popular proposal authored by Nebraska senator Deb Fischer found its way into Senate Finance Committee Chairman Orrin Hatch’s tax reform markup.
“I am thrilled Chairman Hatch adopted my paid family leave proposal in his tax reform markup. This is a big step toward enacting the first nationwide paid leave policy in U.S. history,” said Senator Fischer in a statement Wednesday.
Fischer’s paid leave plan aims to encourage companies to offer two weeks of paid leave to their workers in exchange for a tax credit of 25 percent an employee’s leave-time earnings. It’s the leading bipartisan proposal for national paid leave, and the most popular according to a Pew survey earlier this year that found 87 percent somewhat or strongly favor “providing tax credits to any employer that provides paid leave.”
At a cost of $1 billion a year, it’s far more manageable than the 12-week, payroll-tax-funded paid leave Democrats have sought for years—with little more to show for their efforts than inspiring a plank in the former Clinton campaign platform.
But being a nudge and not a mandate, it’s also much less certain the 25 percent tax credit would have any great effect. Business owners may not find it financially sound to offer two weeks of paid leave in exchange for so slim an offset, especially one that’s limited by the proposed two-year time span for an individual provision.
It will most likely to benefit those whose employers are already inclined to offer paid leave, says Angela Rachidi, an anti-poverty policy expert at the American Enterprise Institute and co-author of AEI’s paid leave proposal.* “It’s very encouraging to see that it’s in the Senate version,” she said, but cautioned against satisfaction with a small win, adding, “I just hope that efforts to get access to paid leave for all workers (like Trump’s original proposal) are not abandoned.” For now, the Fischer plan is likely to succeed, she believes. If only because, “Politically it seems they need to do something on paid leave,” Rachidi said, of Republicans.
Abby McCloskey, a Republican consultant and fellow co-author of the AEI proposal who’s worked to make paid leave policy a more central concern across party lines, is also reservedly optimistic about the progress of Fischer’s plan.
“I’m encouraged there’s a desire from Republicans to address paid leave,” McCloskey said. “But the Fischer bill is more of a test than a plan.” The pilot program’s two-year limit, which is standard for individual provisions in the tax plan, makes it less costly, she allows—”but also makes it unlikely that businesses change their benefit plans for a very temporary credit.”
In other words, the same feature that makes Fischer’s proposal tolerable to conservatives could be the same reason this “pilot” flops.
But Senator Fischer isn’t shy about this prospect. She clarified in conversation with THE WEEKLY STANDARD earlier this year that it’s a two-year pilot program with no assured outcome other than a step in the right direction for hourly wage workers. And as such, “it should be thoughtfully considered, I think, by everyone,” she told me.
“It meets a specific need of hourly workers,” she also said at the time. And to counter critics of the proposal’s potentially minimal effect, she added, “I would find it very difficult to look a single mother in the eye and say, ‘Well I didn’t vote for Senator Fischer’s bill so you could take a couple hours off to take your child to the doctor because it didn’t go far enough.’ To me that is a pretty weak excuse.”
Ivanka Trump, the White House’s leading advocate for pro-family tax policy and paid leave, was an “active listener” at pro-family tax meetings with senators this summer, Fischer said. She took a keen interest in the Nebraska senator’s tax credit bill. Since then, Trump gave her support to the planned Child Tax Credit expansion, which in Tuesday’s draft of the Senate bill doubled the existing credit to taxpayers with minor children from $1,000 to $2,000. On top of which, the inclusion of Fischer’s proposal suggests favorable headwinds for paid leave proper.
*Correction, Nov. 16: This article originally and incorrectly referred to the paid leave proposal as part of AEI’s platform.
