Tax credits pitched as salve for parental leave outlays

Rep. Sarah Anderson (R-Plymouth) believes tax credits would ease the path for workers taking unpaid parental leave and employers who offer paid parental leave.

A bill she sponsors to create such enrichments, HF315, was approved Wednesday by the House Job Growth and Energy Affordability Policy and Finance Committee on a 12-9 roll-call, party-line vote. It now moves to the House Taxes Committee.

The companion, SF454, sponsored by Sen. Carla Nelson (R-Rochester), awaits action by the Senate Taxes Committee.

The bill envisions two kinds of tax credits: one for employers and another for employees.

Employers would be able to claim a credit amounting to 25 percent of what they pay employees who take paid parental leave. The maximum credit would be $3,000. Any credit in excess of tax owed would be carried over to the next taxable year.

Employees would be able to claim a credit for 25 percent of wages they forego by taking unpaid parental leave. The credit, with a $1,000 maximum, would be computed on a weekly wage, and be adjustable according to the index of child care costs by county maintained by the Department of Human Services.  If the amount of the credit exceeds the tax the employee owes, the state would pay the excess to the employee as a refund.

WATCH Committee debate on bill to allow tax credits for parental leave costs

The bill takes its definition of parental leave – taken on the occasion of the birth or adoption of a son or daughter -- from the federal Family and Medical Leave Act.

Anderson won muted praise for tackling the issue from 11 testifiers who said it wasn’t enough. But many said the tax credit for employees would take too long. “No waitress or waiter could wait a year,” said Rep. Rena Moran (DFL-St. Paul). “It just doesn’t make sense.”

Todd Mikkelson, who owns a small business in Orono, said the bill wouldn’t help in his current situation, with an employee out with hip surgery. “It would only help if he had a baby.”

Representing the Minnesota Restaurant Association, Dan McElroy said the organization’s board backed the tax-incentive approach over a mandate.