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Maine House Speaker Sara Gideon has introduced a bill calling for a .5% tax on all wage income, in order to fund paid leave for all Maine workers who want it.
House speaker proposes new tax to fund paid leave for Maine workers
You can read the article to get the sketchy details.Then let's run some numbers.
(Source for data: Maine.gov)
Maine has about 599,000 workers.
Maine mean wage per annum in 2017 was $45,300. At .5% that's $225 per year going to the fund, from one worker.
There were a bit more than 12,000 babies born in Maine in 2017
Based on the mean wage, leave pay at 80% = $700 per week.
That means it takes 3 workers per week to fund that leave, or 36 workers per 12 weeks maternity leave.
So it takes 432,000 workers to fund 12,000 maternity leaves in a year.
That would leave 167,000 workers to fund all other leaves funded by the tax.
Five days of sick leave per year would take 3 workers for each individual who uses the benefit.
56,000 people work in food prep and serving.
26,000 work in personal care of some type.
Say 56,000 use this benefit.
That's 168,000 workers to pay for their leave.
Now our fund is at zero, never mind the individual who wants to take 20 weeks to care for an ailing relative.
One individual taking 20 weeks to care for a parent would need the taxes of 60 other individuals.
What about the effect on take-home pay?
Assume the typical Maine income taxpayer pays an effective tax rate of 5%.
This new tax increases that by 10%. (0.5 = 10% of 5)
At a time when poverty advocates insist that wage rates need to rise to combat income inequality, a 2% wage increase would become a 1.5% increase.
An individual with a stagnant wage will see his take home pay fall. (Assume 260 days worked per year).
BUT if he takes 5 sick days and claims the paid leave, his effective unpaid days go from 5 to just 1 after figuring in the change in taxation.
What about employers who now offer PTO? Will they drop it? Why wouldn't they? I foresee a mandate on employers of a certain size to provide paid leave, in anticipation of this perverse effect.