H.R.1424 - To amend the Internal Revenue Code of 1986 to increase the employer tax credit for paid family and medical leave. (119th Congress)
Summary
H.R. 1424 proposes amendments to the Internal Revenue Code of 1986, specifically targeting Section 45S, which deals with the employer tax credit for paid family and medical leave. The bill aims to increase the credit percentages and make the credit permanent by removing the sunset clause. These changes would apply to taxable years beginning after December 31, 2025.
The bill increases the credit from 12.5% to 25%, 25% to 50%, and adjusts the incremental increase from 0.25 percentage points to 0.50 percentage points.
Overall, the bill seeks to incentivize employers to offer paid family and medical leave by enhancing the associated tax credit.
Expected Effects
If enacted, H.R. 1424 would likely lead to an increase in the number of employers offering paid family and medical leave to their employees. This is due to the enhanced tax credit making it more financially attractive for businesses to provide such benefits.
Employees would benefit from increased access to paid leave, allowing them to take time off for family or medical reasons without financial hardship. The permanence of the credit would provide long-term stability and predictability for both employers and employees.
The change could also influence workforce participation and productivity as employees feel more supported.
Potential Benefits
- Increased access to paid family and medical leave for employees.
- Greater financial incentive for employers to offer paid leave.
- Improved employee morale and productivity due to increased job security and benefits.
- Potential reduction in employee turnover as paid leave becomes a more common benefit.
- Enhanced support for families and individuals dealing with medical or caregiving needs.
Potential Disadvantages
- Increased government spending due to higher tax credit claims.
- Potential for businesses to exploit the credit without genuinely improving leave policies.
- Complexity in tax code may increase compliance costs for businesses.
- Possible inflationary pressure if increased labor costs are passed on to consumers.
- The cost of the credit may outweigh the benefits if not carefully managed.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution (Preamble), which allows Congress to enact laws that promote the well-being of the population. Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States (Article I, Section 8, Clause 1).
The bill does not appear to infringe on any specific individual rights or liberties protected by the Constitution or its amendments. The bill falls under the purview of Congress's power to regulate taxation and spending.
However, the extent to which such tax credits are effective in promoting the general welfare is a matter of policy debate.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).