Low-income workers should not have to give higher-income workers more of their wages
(Photo by)
All W-2 workers in Washington state should count on continual pay decreases to pay for the state's mandatory paid-leave program — a program that doesn't pay its way and that requires low-income wage earners to supplement the life needs and wants of upper-wage earners. How's that for regressive?
Employment Security Department numbers show that middle- and upper-income people use paid leave far more than those with lower incomes. In fact, people making $60 or more an hour used the fund nearly twice as much as the lowest wage earners in fiscal year 2024. Meanwhile, full-time workers of all incomes already lose hundreds of dollars a year to this tax. (Calculate your losses here: https://paidleave.wa.gov/estimate-your-paid-leave-payments/.)
The Paid Family and Medical Leave program is no safety net. It makes most workers less able to pay for the life needs they do have. The Legislature should have considered ending it this year.
Instead, lawmakers considered Senate Bill 5292, which in the end proposed taxing workers up to $2 of every $100 in earnings in the coming years for a benefit many will never see. That new, higher rate would've been more than double the current tax. The bill died, but the proposal could still be considered again next session. That's likely because the funding now available for the program doesn't cover its costs.
The Joint Legislative Audit and Review Committee said that administrative costs and benefits exceeded revenue for the paid-leave program in two of its first four years. And in 2023, the program got a $200 million bailout from the state's general fund to deal with higher-than-expected claims. The fix was temporary, however. A state consultant forecasts that the program will likely see negative net income again in three of the next five years.
That's not hard to understand. People like it when other taxpayers help pay for their life wants and needs — especially when a portion of their wages has contributed to a pool of money during their working years.
This year, the tax for the program is already 92 cents on every $100 a worker earns — up to the 2025 Social Security cap of $176,100. That's more than twice the amount when the tax began in 2019 at 40 cents per $100 of earnings. (Employees pay about 72% of this tax. Employers contribute about 28% on behalf of their employees. That's money that then can't go toward increased worker pay or other benefits.)
The most recent version of Senate Bill 5292 outlined increases in the 1.2% Paid Family and Medical Leave tax rate cap. The bill called for raising it to 1.4% in 2027 and 2028, 1.6% in 2029 and 2030, 1.8% in 2031 and 2032, and 2% for 2033 and subsequent years.
While some supporters of this harmful worker tax brag that thousands have been helped by it, they fail to mention that millions of workers have not. And for some of those workers, making ends meet is more difficult because of it. The paid-leave tax penalty state lawmakers have placed on workers puts self-sufficiency further out of reach for some Washingtonians and should end.
Federal law already allows workers 12 weeks of job-protected, unpaid family leave. It doesn't pay people not to work while taxing those who do work but don't have the luxury of taking weeks off, even with paid leave.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
18 minutes ago
- Yahoo
Is It Worth Delaying Claiming Social Security If It Means Withdrawing More From Your 401(k)?
One of the most common dilemmas people face as they near retirement is whether to start collecting Social Security or delay it for a higher monthly benefit. But delaying Social Security often means relying more heavily on other resources, like a 401(k) or other savings, to fill the gap. Is it worth it? Read More: Find Out: 'When it comes to decisions about money, it is a matter of feeling in control and not feeling anxious or stressed,' said Trevor Houston, CEO at ClearPath Wealth Strategies in Frisco, Texas. 'One of the most common questions is whether to wait for the Social Security payments or to take money out of the 401(k) plan early.' Here's what to consider before tapping your 401(k). Delaying your Social Security retirement benefits beyond full retirement age (FRA) results in a higher monthly benefit amount until age 70. 'If you delay taking Social Security, the monthly check will increase by about 8% each year until you reach age 70. That's equivalent to getting a salary increase every year,' Houston explained. 'Pretty nice, right? However, the strategy of waiting only makes sense if you have enough in savings, investments or your 401(k) to cover your bills while you are waiting.' Here are some important factors to consider: Life expectancy: Do you have any serious health conditions? Have your parents and grandparents lived long lives? If you're in good health, waiting could give you a bigger monthly check. On the other hand, Houston explained that if your health or family history suggests a shorter life expectancy, it may make sense to claim Social Security early and use the money while you can. Monthly living expenses: How much money do you need every month to pay your basic living expenses? 'If you start taking out your 401(k) too early, you could end up short later on, especially if the market declines,' Houston said. This is called sequence risk, which could disrupt your retirement plan. A 2024 Vanguard report found that the average 401(k) balance for those age 65 and older is $272,588. However, the average is often skewed by high earners, and the median balance is $88,488. Taxes: Money from your 401(k) is taxed as ordinary income. According to Houston, taking out large sums of money could push you into a higher tax bracket. Safety and security: A stable monthly income provides a feeling of safety and security. 'Some people like to have the Social Security check coming into their account each month. It feels like a regular paycheck, and that provides a great deal of peace of mind during retirement,' he pointed out. Discover More: To show when this strategy might work, Houston provided an example: Let's say David reaches age 66, is in good health, and his parents are in their 90s. His 401(k) balance is around $400,000, and he doesn't need Social Security to pay bills or meet other financial needs. David chooses to delay Social Security and withdrawal from his 401(k) instead. Also, because of his conservative risk tolerance, his 401(k) generates a 5% annual growth rate, less than the 8% annual increase he'd get by waiting on Social Security. 'At the end of the day, waiting for Social Security and using your 401(k) could be a smart strategy if you have enough savings, and you expect to live a long time. But everyone's situation is different,' Houston wrote. 'A financial professional should evaluate your personal goals to determine the best course of action for your specific situation.' More From GOBankingRates 9 Downsizing Tips for the Middle Class To Save on Monthly Expenses This article originally appeared on Is It Worth Delaying Claiming Social Security If It Means Withdrawing More From Your 401(k)? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Los Angeles Times
4 hours ago
- Los Angeles Times
Filing a tax return after a parent dies
Dear Liz: My mother's only income was Social Security. Her accountant told her many years prior to her passing that she didn't need to file a tax return. I was the executor of her trust and told the attorney I hired to help settle the estate that I would file her final tax return. I never did. That was 10 years ago. Now I feel that I should have filed it back then and am wondering if I should do it now or forget about it. Answer: If you still have access to her paperwork, you can review her bank statements to see if there is any indication her income climbed enough in her last years to require filing an income tax return. If so, you can consult a tax pro about next steps. But you're probably fine, says estate planning attorney Jennifer Sawday in Long Beach. If your mother was under the threshold for filing an income tax return, there would have been no reason to file a final return after she died, Sawday says. Dear Liz: You recently answered a question about closing credit cards and mentioned the 'mental load' of managing too many cards. That got me thinking about when is the right time to start simplifying my finances. I have lots of rewards credit cards and have opened several bank accounts to get bonuses, but I wonder at what age I should start consolidating so everything's easier to track. Answer: Simplifying our finances can allow us to better monitor our accounts, helping to avoid mistakes and fraud. Reducing the number of accounts we have also makes it easier for our trusted people to take over for us, should we become incapacitated. But consolidating gets particularly important as we age and start to face cognitive deficits. Our financial decision-making abilities peak in our 50s, after all, and can really drop off in our 70s and 80s. You can get ahead of this curve by consolidating accounts as you go along. When you leave a job, for example, consider rolling your old retirement account into your next employer's plan or an IRA so that you don't lose track of the money. If you're thinking of opening a new bank account, consider whether there's an old one you can close. Shuttering credit card accounts can affect your credit scores, so open new accounts sparingly and think about closing any that you're not using, particularly if they're newer or lower-limit cards. Your 60s may be a good time to get serious about winnowing the number of accounts and institutions you're juggling. Many people find it's much easier to have one bank, one brokerage and a few credit cards than to have accounts scattered across the financial landscape. Dear Liz: My sister and brother-in-law were both 68 when she passed away last December. She had been on Social Security disability since her mid 50s until it was converted to retirement in her 60s. He is the higher wage earner and still working. Can he file for survivor benefits now, and then file for his own retirement benefits after he stops working when he turns 70? Answer: Yes. Since your brother-in-law has passed his full retirement age of 67, he won't face the earnings test that would otherwise reduce any Social Security benefits he receives. His applying for a survivor's benefit now won't preclude him from applying for his own benefit later. His own benefit can continue to grow until it's maxed out at age 70. Note that survivor benefits have different rules than spousal benefits, which are based on the earnings record of someone who is still alive. When applying for a spousal benefit, you're also considered to be applying for your own, and you'll get the larger of the two. There's no switching later. Liz Weston, Certified Financial Planner, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the 'Contact' form at
Newsweek
5 hours ago
- Newsweek
Map Shows Cheapest and Most Expensive States to Retire Comfortably
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. As large swaths of Americans are dipping into their savings to combat increased costs and economic tensions, living in some states as opposed to others could provide better long-term financial security. Why It Matters Financial instability has roiled countless Americans, some of whom are now more fearful of running out of money than dying. Simultaneously, people short on cash or worried about the stock market are dipping into their retirement accounts at higher levels than previously seen. What To Know Americans' economic anxieties come from different places, including fears of recessions, inflation, health issues, grocery and gas prices, tariffs, and fears of government cuts to Social Security and Medicaid. Kiplinger, a publisher of business forecasts and personal finance advice, devised a list of the states where money will go the longest in retirement without breaking the bank. The top 10 states where you need the least savings to retire are as follows: West Virginia – $712,913 – $712,913 Kansas – $741,455 – $741,455 Mississippi – $753,472 – $753,472 Pennsylvania – $864,633 – $864,633 South Carolina – $869,140 – $869,140 Minnesota – $870,642 – $870,642 Wyoming – $872,144 – $872,144 Illinois – $873,646 – $873,646 North Carolina – $905,192 – $905,192 Maryland – $924,720 The top 10 most expensive states where you need savings to retire are as follows: Hawaii – $2,212,084 – $2,212,084 Massachusetts – $1,645,764 – $1,645,764 California – $1,612,716 – $1,612,716 Alaska – $1,292,753 – $1,292,753 New York – $1,292,753 – $1,292,753 New Jersey – $1,163,566 – $1,163,566 Vermont – $1,153,051 – $1,153,051 Washington – $1,145,540 – $1,145,540 Maine – $1,144,038 – $1,144,038 Arizona – $1,133,522 A recent AARP survey found that about 20 percent of adults age 50 and older have no retirement savings, and roughly 61 percent are worried they will not have enough money to support themselves in retirement. While Americans are 15 times more likely to save for retirement when they have access to a plan through their employer, AARP reports that nearly 57 million people do not have access to a work-based retirement plan. John Tamny, founder and president of the Parkview Institute and senior fellow at the Market Institute, told Newsweek that the nation is in a "pivotal moment" following general inaction on behalf of multiple presidential administrations and countless lawmakers in Washington, D.C. He said the Trump administration is taking steps required to stabilize long-term fiscal sustainability by addressing structural deficits, rebalancing global trade relationships, and initiating housing reforms that prioritize supply-side incentives. "There are tensions," Tamny said. "Tariffs, housing affordability, concerns around entitlement spending—but these issues didn't begin today. What is new is the willingness to confront them head-on. That means Americans should reframe retirement planning not around fear, but around resilience. "In this environment, retirement preparation should be more dynamic, incorporating inflation-protected investments (like Treasury Inflation-Protected Securities, or TIPS), flexible retirement age expectations, and diversified income streams. Social Security may see adjustments, but by acting now, decades before any potential shortfall hits, this administration is likely protecting the program's future viability." A study by Vanguard that examined data from nearly 5 million people with retirement accounts found a record 4.8 percent of account holders took hardship withdrawals from their 401(k) accounts in 2024, up from 3.6 percent in 2023. He also said that geography certainly plays a role in how Americans of different ages and financial backgrounds are affected, and in turn their retirement prospects. For example, Americans in high-cost areas should plan more carefully as should those in coastal cities with high housing costs and climate-related infrastructure pressures, like California and Florida. "For Americans in high-cost states, that means thinking seriously and strategically about location," he said. "It's practical to think this way. Remote work, more portable benefits, and expanding infrastructure make relocation more feasible than ever. "Retirement security is no longer just about how much you save; it's also about where you spend those savings."
