Message to the Congress Transmitting Proposed Family Leave Tax Credit Legislation

To the Congress of the United States:

I am pleased to transmit for your immediate consideration and enactment the "Family Leave Tax Credit Act of 1992". This flexible family leave plan will enable 80 percent of the workplaces in the country -- the small and mid-sized businesses that often cannot provide family leave -- to provide family leave for their employees without costing jobs or stifling economic growth. The proposal will cover 15 million more workers, and 20 times as many workplaces, than the proposals in S. 5.

This legislation will provide a refundable tax credit for up to 20 percent of total compensation, for up to $100 a week -- to a maximum of $1,200 -- for businesses that provide their employees with 12 weeks of family leave. An employee would be eligible to take leave under the following circumstances: the birth of a child, the placement of a child with the employee for adoption or foster care, care for a child, parent, or spouse with a serious health condition, or a serious health condition that prevents the employee from performing his or her job.

This is not federally mandated leave. It instead gives employers positive incentives to adopt responsible family leave policies and gives them the flexibility to target the specific needs of their employees. To qualify for the credit, businesses must adopt nondiscriminatory policies that provide protections for employees' jobs, benefits, and health insurance.

On May 5, 1992, the Administration transmitted the "Health Benefits for Self Employed Individuals Act of 1992" to the Congress. This proposal was also intended to help improve benefits for small businesses, without deterring economic growth, by expanding the deductibility of health insurance from 25 percent of costs to 100 percent of costs. Packaged with the Family Leave Tax Credit, we are providing a strong impetus for small businesses to develop quality benefits programs.

The Department of the Treasury has estimated the cost of the Family Leave Tax Credit at approximately $500 million for FY 1993 and $2.7 billion over 5 years. The combined cost of the Family Leave Tax Credit and the "Health Benefits for the Self Employed" is $740 million in 1993 and $7.7 billion over 5 years. These costs must be offset under the Budget Enforcement Act of 1990. In my 1993 Budget, I identified $68.4 billion of specific mandatory spending reductions. Any of those offsets would be acceptable to the Administration. Additionally, when the self employed tax credit was transmitted to the Congress, over $9.3 billion of these offsets were specifically suggested to pay for the proposal -- substantially more than was required. Those same $9.3 billion in offsets are sufficient to pay for the costs of both the self employed deduction and the Family Leave Tax Credit under the Budget Enforcement Act of 1990.

I urge the Congress to take prompt action to generate constructive family leave policies that are consistent with economic growth by quickly passing this legislation.

George Bush

The White House,

September 16, 1992.