Tax Increases and Government Mandates Are Not a Solution
When we enacted tax reform in 2017, through the Tax Cuts and Jobs Act, we had two goals – simplify compliance and reduce the tax burden on as many Americans as possible. Despite – or I would argue because of – these rate reductions, a strong economy means U.S. federal tax revenue continues to come in at record levels. The federal government does not have a revenue problem. It has a spending problem.
Even with revenue at record highs, the primary focus of Democrats on the Ways and Means Committee continues to be raising taxes to pay for even more spending. This week our committee discussed two important issues, paid leave and infrastructure. I am glad these two important issues are receiving attention. However instead of new and creative ideas, we were presented with one-size-fits-all tax hikes.
The majority's solution for expanding access to paid leave is the so-called FAMILY Act. This proposal would create a new payroll tax and require the Social Security Administration to administer a new paid leave benefit for all Americans. While this proposal is certainly well-intentioned, as most government mandates, the result would have many unintended consequences, particularly with small business, farmers, and ranchers. Like Social Security and Medicare, employers would pay half of the payroll tax for every employee, including themselves. Economists tells us the employer-paid share of payroll taxes ultimately comes out of a worker's salary. For the self-employed workers, including farmers and ranchers, both halves of payroll taxes are paid directly as a self-employment tax, or SECA.
The mandate would also have a negative impact on benefit customization. Many businesses, large and small, are already able to offer paid leave which fits the needs of their employees. Farmers and ranchers would also be impacted as they can't just step away from taking care of their crops, livestock, or business and receive a check in lieu of their work. This would mean more than 20 million Americans – about one-eighth of our labor force – would be asked to pay this new tax but would not be able to use the benefit.
The majority's infrastructure proposal was more of the same. Instead of a constructive discussion of the challenges inhibiting infrastructure improvements such as the restrictive permitting and duplicative labor requirements, the solution was to throw more money at the problem.
We know spending more money without reform only expands problems. Our country needs real solutions for our infrastructure, including transportation, pipelines, broadband, and water management among them. In Nebraska we have numerous levees in need of repair after last year's storms and flooding, with another heavy spring runoff expected. To truly fix our infrastructure, we need to improve how these dollars are spent and enact needed reforms to ensure we are getting a quality product at the best price possible.
I am committed to finding solutions to these two major issues. The Tax Cut and Jobs Act included a proposal by Senator Fischer to create a tax credit for employers offering paid leave, and the recently enacted SECURE Act included a provision which allows new parents to access their retirement savings.
President Trump has put forward an infrastructure plan dealing with needed reforms and investments. There is room for a constructive conversation on paid leave and improving our infrastructure. As we continue our discussions, I hope we focus on commonsense, fiscally responsible solutions.