Accounting & Bookkeeping & Small Business Forum

Even before his administration has formally begun, President-Elect Obama has created
a “policy agenda” that identifies priorities he hopes to implement in the coming months
[http://change.gov/agenda]. Note that none of these agenda items have been translated
into legislation and voted on by Congress. Details are still under discussion and are not
yet available. It is clear, however, that several of these items, if enacted into law, would
have a big impact on the payroll department:
● Increase the minimum wage. This proposal would raise the minimum wage to
$9.50 an hour by 2011 and index it to inflation.
● Making Work Pay tax cut. This proposal would permanently cut taxes by
$500 per person ($1,000 per family). Ideas under discussion for implementing this
proposal include reduced federal income tax withholding, and a payroll tax holiday (see
“Inside Washington” for January 2009), and rebate checks (based on tax year 2007
returns).
● Tax cut for seniors. This proposal would eliminate all income taxation of
seniors making less than $50,000.
● Reverse certain Bush tax cuts. This proposal would reverse most of the
Bush tax cuts for the wealthiest taxpayers (i.e., families making over $250,000). Ideas
under discussion for implementing this proposal include immediate reversal of certain
provisions of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of
2001 vs. allowing them to “sunset” (i.e., expire) on January 1, 2011.
● Earned Income Tax Credit expansion. This proposal would expand the EITC
so that full-time workers making minimum wage would get a benefit of more than three
times what they can currently claim. If they are paying child support to support their
children, their benefit would be doubled. The proposal would also reduce the EITC
marriage penalty.
● Family and Medical Leave Act expansion. This proposal would expand the
FMLA to cover businesses with 25 (currently 50) or more employees. The proposal
would also permit leave for more purposes, including participation in children’s
academic activities (24 hours per year), leave for workers who care for individuals who
reside in their home for six months or more, and leave for employees to address elder
care, domestic violence, and sexual assault.
● Extend paid sick time benefits. This proposal would require that employers
provide seven paid sick days per year.
● Encourage states to adopt paid leave. This proposal would establish a fund
to assist states with start-up costs and to help states offset the costs of paid-leave
systems.
● National Health Insurance Exchange. This proposal is to establish an
exchange with a range of private insurance options as well as a new public plan based
on benefits available to members of Congress that will allow individuals and small
businesses to buy affordable heath coverage.
● Small Business Health Tax Credit. This proposal is for a new tax credit to
help small businesses provide affordable health insurance to their employees.
● Coverage of catastrophic health costs. This proposal would cover a portion
of the catastrophic health costs businesses pay in return for lower premiums for
employees.
● Large employer health care mandate. This proposal would require large
employers that do not offer coverage or make a meaningful contribution to the cost of
health coverage for their employees to contribute a percentage of payroll toward the
cost of their employees’ health care.
● American Jobs Tax Credit. This proposal is for a new temporary tax credit
available during 2009 and 2010. Existing businesses would receive a $3,000 refundable
tax credit for each additional full-time employee hired in the U.S.
● UI benefit extension and temporary suspension of taxes on these
benefits. This proposal would extend unemployment insurance benefits for 13 weeks
and temporarily suspend taxes on UI benefits in order to increase relief.
● Automatic pension plan enrollment. Under this proposal, workers would
automatically be enrolled in their workplace pension plans. An employer that does not
currently have a plan would be required to enroll employees in a direct-deposit IRA
account compatible with existing direct deposit payroll systems. Employees could opt
out of these plans.

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