Legislation unveiled Tuesday by House Ways and Means Chairman Richard E. Neal would provide 12 weeks of paid family and medical leave and “guaranteed” access to child care, and permanently extend a trio of tax credits for lower-income workers and families that were part of last month’s $1.9 trillion relief law.
“Our economy is premised on the idea that some workers are worthy of ‘perks’, like paid leave or affordable child care that works for their schedules, while the majority are forced to fend for themselves,” the Massachusetts Democrat said in a statement introducing the bill, which he’s referring to as a discussion draft.
The measure comes as the Biden administration was putting the finishing touches on $1.8 trillion in new proposed spending and tax cuts on education, child care and paid leave.
One of the areas in dispute has been how long the newly expanded child tax credit would be extended for; the White House is proposing an extension through 2025. Neal’s proposal, with broad support across the Democratic Caucus, would get in front of President Joe Biden’s rollout by proposing a permanent extension of the pricey credit, which cost $110 billion just for one year in the March aid package.
The March law boosted the child tax credit from $2,000 to $3,000 per child, and to $3,600 for children under 6 years old. It also made the amounts fully refundable for parents without enough income tax liability for the credit to fully offset. Combined with extending the current child tax credit which expires after 2025, the right-leaning Tax Foundation has estimated it could cost $1.6 trillion alone to make those provisions permanent.
As in the White House proposal, Neal would also make permanent a $26 billion, one-year expansion of earned income tax credits for childless adults and a one-year, $8 billion expansion of a separate child and dependent care tax credit.
Neal’s legislation would provide up to 60 days of paid family and medical leave for all U.S. workers, replacing up to 85 percent of monthly wages for those making roughly $15,000 annually and sliding down to 5 percent wage replacement for income between around $100,000 and $250,000, with the amounts indexed for inflation. The intent is to provide around two-thirds income reimbursement for the average worker, according to a summary.
The Congressional Budget Office estimated a similar proposal in 2019 from Rep. Rosa DeLauro, D-Conn., and Sen. Kirsten Gillibrand, D-N.Y., which they’ve reintroduced this year, would cost $521 billion. That measure would impose a 0.2 percent payroll tax on both workers and their employers to partially cover the cost, but Neal doesn’t specify any offsets and Biden has pledged not to raise taxes on anyone making less than $400,000.
The White House proposal appears slightly less expansive — and costly — clocking in at $225 billion over a decade, according to a fact sheet. The administration says the plan would phase in the 12-week paid leave benefit over 10 years, while wage replacement would max out at 80 percent for lower-income workers.
A Joint Committee on Taxation analysis of workplace benefits found that only 20 percent of American workers get paid family leave, 88 percent of workers have access to unpaid family leave and 11 percent of workers receive employer-paid child care benefits.
Neal’s bill also includes a new refundable payroll tax credit for child care providers to raise wages for their workers. Low wages in the industry are blamed for the general shortage of child care providers.
As part of the goal to bolster a struggling child care system and to “guarantee” access to care, the legislation would provide $15 billion for grants to improve child care facilities. It also would boost the current $3.55 billion in funding for state-run child care programs to $10 billion starting in fiscal 2022, and index that to inflation for future years to spend on communities experiencing child care shortages and for investments in tribal and territory child care.
The legislation would also establish information networks to help parents find available child care slots and to assist workers in accessing paid leave, unemployment insurance benefits and child care.
In material released with the legislative text, Neal said the added funding is needed as women have struggled to remain in the workforce during a pandemic that has led to the unavailability of child care. The lack of support for working women is a key reason for the need for child care legislation, Neal said at a recent Ways and Means hearing.
“We’ve essentially told women, ‘Good luck fending for yourself,’” he said.
Meanwhile, a group of Democrats in both chambers, led by Massachusetts Sen. Elizabeth Warren and New York Rep. Mondaire Jones, introduced a proposal for as much as $700 billion in new child care spending over the next decade.
“Today, in more than half the states in America, a year of child care costs more than a year of in-state college tuition,” Jones said in a joint statement. “As we work to Build Back Better, advancing universal child care is essential to ensuring an equitable and just economic recovery for all communities.”
Ahead of Biden’s plan rollout, the group wrote to the president last week promoting proposals such as subsidizing child care so that families pay no more than 7 percent of income and increasing payments to child care providers. Biden is proposing scaled-down versions of the Democrats’ measure, at a $225 billion cost.