Paid Leave, Other Job-Related Measures Stay in Tax Bill

By Tyrone Richardson

Incentives for companies to offer their workers paid leave, in addition to prohibiting deductions related to confidential settlements related to sexual misconduct, are part of the final version of a Republican tax reform bill lawmakers are set to vote on early this week.

Republicans late Dec. 15 released the final bill (H.R. 1), which included the conference committee report that rectifies House and Senate versions of the legislation. The bill is a key part of what the GOP says is “pro-growth tax reform” to create “fairer taxes and bigger paychecks.”

“Our final package delivers on the promise we made to provide real relief to hardworking Americans,” said Sen. John Thune (R-S.D.), chairman of the Senate Republican Conference. “After years of economic stagnation, this bill will usher in a new era of economic dynamism in this country.”

Congressional Democrats have criticized the bill, touting it as resembling past “trickle down economics” that stops short of truly rewarding the middle class. The legislation is likely to get strong Republican support when it comes for votes in both chambers in the days before the holiday recess.

Paid Leave Remains in Legislation

The measure includes tax code changes for scenarios ranging from home buying to employment.

That includes offering businesses a credit for offering up to 12 weeks of paid family leave. The measure, plucked from a stand-alone bill ( S. 344) by Sen. Deb Fischer (R-Neb.), also includes incentives for offering medical leave.

“Creating the first-ever nationwide paid family leave policy will be a huge step forward for American women and working families,” Fischer said in a written statement.

Fischer’s measure is just one of several leave bills floated this Congress. Paid leave has been a high-profile issue this year, elevated by President Donald Trump and White House aide Ivanka Trump asking Congress to find ways to consider paid leave for working families.

Fischer’s measure, however, has received criticism from some employee advocates like Project for Working Families. The bill is unlikely to increase the number of employers offering the benefit in part because the tax credit only lasts two years before it has to be re-evaluated, the coalition of unions has told Bloomberg Law.

Harassment, Free Food Provisions

The tax bill also prohibits businesses from deducting the cost of confidential settlements in claims of sexual misconduct.

This comes in the midst of what has been a steady stream of sexual harassment allegations against high-profile men, including congressional lawmakers.

The bill also has provisions that change deductions related to some fringe benefits, often used to recruit employees. This includes reducing the amount a company can deduct related to costs for providing free food to employees.

The tax bill would also remove the tax incentives for businesses to provide commuter and parking benefits for employees. That means the up to $255 per month that companies can provide and write off as a business expense will be removed.

The bill’s authors have argued that some specific deductions would no longer be needed since the overall corporate tax rate would be reduced. Still, transportation industry advocates like American Public Transportation Association has concerns.

“Our concern at the American Public Transportation Association and the industry is that there might be some companies that choose to not offer the benefit because they no longer have that business deduction,” association spokeswoman Virginia Miller told Bloomberg Law Dec. 18. “This benefit has always been a good way to attract employees and it’s a good benefit. Now, without that, it’s a business’s decision and we don’t know what a company might do.”

— Jon Steingart contributed to this story.

To contact the reporter on this story: Tyrone Richardson in Washington at trichardson@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com

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