Written by Jon Lynch, candidate in the Republican Primary for Colchester 9-2 (lynch2020.com)

I support Paid Family Leave, but not in the manner in which it has been proposed in Montpelier. The Vermont legislature has focused its efforts on creating an expensive and expansive bureaucracy to manage yet another big government program. It mandates employee contributions, burdens employers (particularly small-business owners) and opens the door for more fraud. It is also a heavily regressive tax that disproportionately impacts low-income Vermonters.

Do we really need yet another big government program sucking hard-earned cash out of our paychecks? Like a fish needs a bicycle!

My proposal takes a different approach. We need to put Vermonters back in control of our own money. A great way to do this is via tax-advantaged Family Leave Savings Accounts (FLSA's). Much like the Health Savings Accounts (HSA's) that many of us frugal folks already use to pay for healthcare expenses, these accounts can be funded by individuals (and optionally employers) in a tax-advantaged manner. FLSA funds can be distributed to the account owners and any of their family members — up to and including second-degree relatives — parents, children, siblings, grand-children, aunts, uncles, nephews and nieces.

The amount of the tax-advantaged contribution permitted to an FLSA account will be limited to $2,000/yr. To jump-start the program, in the year that the FLSA account is opened, it can be funded with up to $10,000 tax-free.

This program dovetails with the existing Vermont Parental And Family Leave Act which expands the provisions of the Federal FMLA program and requires employers with 10 or more employees to offer up to 12 weeks unpaid family leave per year — in addition to any paid vacation and sick benefits offered voluntarily by the employer. Employers are free to extend this leave at their discretion, and in the interests of hiring and retaining the best employees, many already do.

My FLSA plan offers Vermonters several exciting advantages:

  • No bureaucracy required. FLSA accounts will be administered by local banks, credit unions and brokerages much like HSA's. The only government involvement is a minor update to the Vermont tax code to permit the year-end reporting of contributions and distributions.
  • Share the benefits. My plan empowers families to save in a tax-efficient manner for expected (and unexpected) events. Funds may be distributed for any qualified family leave expense to the extended family members of the account owner.
  • It's still your money. FLSA funds remain the property of the account owner at all times. As the owner, you will always have full control of your money. You use the funds as you see fit. Over time, you may amass a substantial savings balance, which you are free to use for any qualified family leave expense. At retirement age, unused funds can be rolled-over tax-free to an HSA or donated to another family member's FLSA account.
  • Your own personal emergency fund. In the event of a non-family-leave emergency (such as an expensive vehicle repair), you may withdraw FLSA funds for non-qualified purposes with no penalty, providing the funds are replaced before the end of the calendar year. This gives Vermonters an efficient mechanism to float themselves temporary loans to cover expenses that wouldn't ordinarily be considered qualified withdrawals.
  • Employers (and employees) rejoice! Employers have the option to contribute to their employees' FLSA accounts. What better way to attract talent and reward existing employees than to offer generously-funded FLSA accounts as a company benefit?
  • Fraud is averted. If the stalled Montpelier plan is resuscitated — as our fearless legislators are promising — I predict we will see a dramatic increase in requested time off and family leave benefit claims. It is merely human nature to expect something in return for mandatory taxation that is ostensibly "for your own good." How employers will handle this disruption and ensuing labor shortfall remains to be seen. With my FLSA plan, fraud is minimized — people are far less likely to make dubious claims when spending their own money. In the same way that HSA's reduce healthcare costs, FLSA's will reduce the costs of taking family leave.
  • Best of all - it's voluntary. If you don't want to enjoy the tax benefits of an FLSA account, you do not need to sign up. In that case, my plan will cost you nothing (other than the lost opportunity, for which you might kick yourself later.)

This program would offer even more savings and security if it was also implemented federally. Until then, Vermonters — let's show them how it's done. No bicycle needed!

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