2019 Leg Session, Business/Economy, Columnists, Gold Dome, Mike Rosen, Politics, TABOR, Taxes

Rosen: Paid family leave a tax disguised as a ‘premium’

Despite frantic efforts to save its paid family leave measure, Colorado Democrats in the state legislature reluctantly amended the bill to create a task force to “study” the idea instead. The well-intended but impractical plan was uniformly opposed by Republicans who, in any event, were powerless to stop it as the minority party. But opposition from a few level-headed Democrats was enough to defeat it, for now.

As originally conceived by the sponsors of SB 188, Senators Faith Winter and Angela Williams, the bill would have created a program to pay up to 90 percent of regular wages for up to 12 weeks of leave to care for newborn babies, to receive treatment for a major illness or assist family members who were ill or dying. (The percentage of regular wages was lower for higher-paid workers.)

The plan would be funded equally through deductions from employees’ pay, with a like amount paid by employers. Faced with legitimate opposition by businesses, House Democrats tried to save the bill by removing the employers’ share of payments in their version, HB 1001.

The contrivance in both bills was that these payments (by employees or employers) wasn’t a tax, but rather a premium in an insurance program to be administered by the Department of Labor and Employment. That’s why it was shrewdly titled with the acronym “FAMLI” for Family Medical Leave Insurance Program. This ploy is transparent nonsense. It’s a payroll tax just like the ones withheld from your paycheck for Social Security and Medicare. Misrepresenting a tax as some kind of “fee” ─ or in this case an insurance premium ─ is a tactic Democrat legislators have used in league with Democrat governors and compliant liberal judges with some success in the past. They do this to circumvent the Taxpayer’s Bill of Rights (TABOR), the citizen-initiated amendment to the Colorado Constitution that prohibits new taxes without the consent of the people in a ballot measure.

The House bill imposed this payroll tax (in the guise of an insurance premium) on employees at an “initial” rate of “0.99%.” (Was that to make it seem less costly to the fractionally-challenged than a full “one percent;” like a store pricing a TV at $399 rather than $400?) The bill’s language also conveniently provided a loophole to open the floodgates for future tax increases with this wording: “The director (the bureaucrat in charge of the FAMLI program) may also impose a solvency surcharge by rule if determined necessary to ensure the soundness of the fund.”

Even some Democrat legislators were doubtful that revenues from the payroll tax would cover the estimated $1 billion cost of the program and were concerned about serious fiscal dangers in the future. Given the track record of state (and federal) governments in grossly understating the cost of new social spending programs, you could count on future tax increases being imposed at the discretion of the “director” without Democrat legislators having to vote for them or voters having the ability to stop it.

Oh, I should disclose that Democrats who were pushing the bill brandished a study by the University of Denver’s Graduate School of Social Work claiming that the program could be paid for as structured within the bill. Whatever that means. Do you suppose there’s a possibility that DU’s social workers mill had an ideological bias in promoting this?

Cynically, calling this an insurance program to sidestep TABOR restrictions on new taxes distorts the definition of insurance, which is generally something you voluntarily buy to anticipate the cost of future losses, exposures and liabilities; like auto insurance, fire insurance, life insurance and insurance on your jewelry. The FAMLI program is involuntary and will force people into it who don’t want it and don’t intend to use it, in order to subsidize people who do intend to use it. Including those who will game the system by using it frequently or even falsely with the guarantee, under FAMLI, that their jobs will be waiting for them when they return. Twelve-week leaves for vital employees can greatly disrupt an employer’s work place, especially when a worker takes them repeatedly.

In addition, employees who work for companies that already provide paid family leave would additionally be taxed to fund FAMLI, as would their employers under the original Senate bill.

Fiscally responsible conservatives who opposed FAMLI for perfectly good reasons are branded as heartless by progressives whose unbounded compassion and commitment to “social justice” through unlimited government override all other practical considerations. And that’s how the game of politics is played these days.

Longtime KOA radio talk host and columnist for the Denver Post and Rocky Mountain News Mike Rosen now writes for CompleteColorado.com. 

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