Diary

Crony Capitalism - Marco Rubio edition

[mc_name name=’Sen. Marco Rubio (R-FL)’ chamber=’senate’ mcid=’R000595′ ] is laying out a plan to encourage companies to offer benefits to parents taking time off for new births.  His plan is basically to offer a tax break to companies who provide paid time off to employees.  Sounds great, but…

First, this probably will not change the practices of many companies.  If a McDonald’s franchise is running with a small profit margin the owner probably will not offer this benefit.  However, Caterpillar (just guessing here) who probably already offers such a benefit will take advantage of it.  Basically the money flows to certain companies where compensation is already weighed towards benefits rather than cash.

Second, why add regulatory burden?  In order to qualify for the benefit (of less dollars being paid out in taxes) the company will have to [insert 1,000 page document here].  This would prevent small businesses from participating without paying external consultants even more to process and ensure compliance.  This is a great work program for lawyers, accountants, and government bureaucrats, but not as good for families (except the families of lawyers, accountants, and IRS agents).

Third, it only benefits certain families.  The small business owner cannot take advantage of this.  The  stay at home mother cannot take advantage of it.  Most lower to middle income workers cannot take advantage of it (since their employers still will not be able to participate).

Fourth, it raises friction in terms of employment.  This benefit may be offered at one employer but not another.  If you are planning on having a child you may need to stay at the same employer now not only through birth, but through the paid parental leave time.  If another great opportunity is offered somewhere else you cannot start there, work for one month, and then take the next three off.

Let’s ask this: hospital networks, insurance companies, and pharmaceutical companies helped write much of Obamacare.  Who do you think will be represented when the bill Rubio is proposing goes up for debate?

If a conservative were asked to address this problem what would he do?  If a “solution” to this non-existent problem were to be offered it would probably look a whole lot more like the child tax credit.  Simply raise the level, make it refundable, and index to wages.  That is, the credit would be either $1,500 per child or 1% of AGI per child, whichever is greater.  Simple to understand, does not involve companies, linked to the family rather than employer, does not raise barriers to transferring jobs, is equally available to stay-at-home mothers, applies to small business owners, and provides 0 jobs to lawyers, accountants, or bureaucrats.

[mc_name name=’Sen. Marco Rubio (R-FL)’ chamber=’senate’ mcid=’R000595′ ] – Coming up with the best big government solution to all of life’s problems.