The Washington Outlook from the California Employers
The Washington Outlook from the California 1 Employers Perspective Michael P. Aitken • April 10, 2015 The Washington Outlook from the California Employers Perspective Environment Americans Name Government as the No. 1 U.S. Problem 2 Source: Gallup, March 12, 2015 The Washington Outlook from the California Employers Perspective Environment In U.S., Worries About Terrorism, Race Relations Up Sharply 3 Source: Gallup, March 17, 2015 The Washington Outlook from the California Employers Perspective President Obama 2015 SOTU Pledges Issue Area 4 The Presidency Pledge Budget and Taxes Work for tax reform which lowers taxes on working families and closes tax loopholes Create a new tax cut of $3,000 per child per year to help reduce childcare costs Work to simplify tax code on individuals and businesses Increase top tax rates on capital gains and dividends Climate/Energy Will veto any bills which roll back environmental protections Economy Will veto any bills which attempt to further roll back Dodd-Frank Help states adopt paid leave laws, and push for a federal bill providing seven days of paid leave Push for gender-equal pay legislation Push for an increased minimum wage Education Provide federal access to free community college Work with Congress to help reduce monthly payment sizes of existing student loans Extend internet access to every classroom Health Care Will veto any bills which remove access to health insurance Launch Precision Medicine Initiative to advance disease cures and increase access to personalized medicine (similar to House’s 21st Century Cures Initiative) Immigration Will veto any bills which roll back executive immigration actions Infrastructure Will push for bipartisan infrastructure plan in Congress Expand internet access to all communities and assist development of faster networks International Affairs Receive trade promotion authority from Congress Push for closure of Guantanamo Bay Urge Congress to pass an AUMF resolution against ISIL Work for Iran nuclear deal (pledge to veto any additional sanctions bill) Push for congressional action on cybersecurity legislation Other Protect net neutrality Issue report on administration’s attempt to strengthen privacy protections in domestic surveillance programs Source: 2015 State of the Union Address, WhiteHouse.gov The Washington Outlook from the California Employers Perspective The Presidency Average Presidential Vetoes per Two-Year Term of Congress 5 The Washington Outlook from the California Employers Perspective Proposed Rules Can Be Blocked By Public, Congress, the Courts President Orders Creation of Rule Congress Recommends Rule Agency Proposes Rule ! Agency Notices Problem Process and Obstacles for Enacting and Enforcing Federal Rules Public Comments on Regulation An agency may decide to scrap the proposed regulation after reviewing comments from interested parties and other government officials Rule is Finalized / Published In Federal Register Congress/President Can Review Congress may pass a Resolution of Disapproval prior to the rule’s enactment, which, if signed by the President, will void the rule Rule is Enacted If the rule is challenged in court, a judge can prevent enforcement with an injunction and may eventually strike down the rule Congress may pass new legislation restricting agencies’ ability to enforce the rule Analysis 6 The public comment period is the main obstacle to finalizing a rule; comments from knowledgeable insiders can significantly alter or eliminate the rule Congress can pass a Resolution of Disapproval under the Congressional Review Act to stop a regulation, but the president must sign it in order for the regulation not to take effect; only one resolution of disapproval has ever been signed to halt a regulation Opponents of a regulation can halt a rule’s enactment by successfully challenging the rule in court or lobbying for laws to limit the powers of enforcing agencies The Washington Outlook from the California Employers Perspective The Presidency President Obama Job Approval 7 Source: Real Clear Politics, April 7, 2015 The Washington Outlook from the California Employers Perspective The Presidency Race for 2016 is on… Republican Presidential Nomination 8 Source: Real Clear Politics, March 31, 2015 The Washington Outlook from the California Employers Perspective The Presidency Race for 2016 is on… Democratic Presidential Nomination 9 Source: Real Clear Politics, March 31, 2015 The Washington Outlook from the California Employers Perspective Environment Americans Rate Nurses Highest U.S. Views on Honesty and Ethical Standards in Professions 10 Source: Gallup, December 8-11, 2014 The Washington Outlook from the California Employers Perspective Congress No Sign of Improvement in Americans’ – and Republicans’ – Views of Congress 11 Source: Gallup, March 16, 2015 The Washington Outlook from the California Employers Perspective Congress Every State Legislature Is More Productive Than Congress Percentage of Bills Enacted as Law in Most Recent Legislative Session Legend 0-10% WA 10-25% MT VT ND OR 25-50% MN ID >50% SD NV MI NE CO PA IA UT CA NY WI WY IL KS AZ Congress Enacted 3% of Bills Introduced in the 113th Congress ME OK NM MO KY WV VA NC TN AR SC MS AL TX OH IN NH MA RI CT NJ DE MD GA LA AK FL HI Analysis As measured by the percentage of bills introduced that were enacted as law, every state legislature was more productive than Congress in 2014 The least productive state legislature, Minnesota, enacted 5% of all introduced bills, which was still higher than Congress’ 3% rate Although comparisons are difficult because not all bills are of equal importance, these percentages illustrate the relative ease with which state legislatures pass laws compared to Congress Whereas Congress has experienced years of gridlock and divided government, many state governments are unified under one party and have simpler procedures for drafting and passing legislation 12 Sources: National Journal Research; GovTrack.us; StateNet.com. The Washington Outlook from the California Employers Perspective Congress Republicans Win Record Majority in House Control of the 113th House (2012-2014) Control of the 114th House (2014-2016) Democratic Republican 234 201 AK Total Seats Democrats: 201 Republicans: 234 247 188 AK Total Seats Democrats: 188 Republicans: 247 Analysis 13 Republicans won a total of at least 246 seats in the House, their largest majority since 1928 An expanded GOP majority in the House means that Speaker Boehner will have an easier time passing legislation in the House without Democratic support, and Republicans will also have an easier time holding on to their majority in future elections The Washington Outlook from the California Employers Perspective Congress Republicans Win Solid Majority in Senate Control of the 113th Senate (2012-2014) Control of the 114th Senate (2014-2016) Democratic Republican Independent 2 2 45 53 54 44 Total Seats Democrats: 44 Republicans: 54 Independents: 2 Total Seats Democrats: 53 Republicans: 45 Independents: 2 Analysis 14 Having won most of this year’s competitive races, Republicans secured 54 Senate seats, flipping the Senate from blue to red Since Republicans expanded their majority to 54 seats, they will have an easier time passing legislation in the Senate because they will need fewer Democratic defections to overcome filibusters (which require a 60 vote supermajority) The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues 2015 Public Policy Agenda – Labor and Employment Union supported legislation not seriously in the mix; but may see Republican approaches to: > > > President Obama in SOTU promised an aggressive regulatory and executive approach: > > > > > > 15 Compensation Equity Workplace Flexibility Labor-Management Proposed 541 Overtime Regulation. EEOC Guidance on Pregnancy Discrimination. Executive Order on Compensation Data Collection for Federal Contractors. Executive Order on Sex Discrimination Guidelines. Executive Order on Fair Pay and Safe Workplaces. Presidential Memorandum on Paid Family Leave for Federal Employees. The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues 2015 Public Policy Agenda – Labor and Employment Full NLRB Board will mean increased activity: > SHRM will an advocacy leadership role on many of these in the 114th Congress and in the executive branch: > > > > > 16 Browning-Ferris / Specialty Health Care / D.R. Horton. FLSA Overtime Rules NLRB Ambush Regulations FAR Proposed Regulations Compensation Equity Workplace Flexibility The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues 2015 Public Policy Agenda – Labor and Employment Mandated paid leave continues to be a focus of the Obama Administration, congress and advocacy groups: > > In addition, several states and localities have enacted paid sick leave requirements: > > > 17 Healthy Families Act (H.R.932/S.497) The Family Medical Leave and Insurance Act California Connecticut Massachusetts ….while others have paid family leave insurance programs: > California > New Jersey > Rhode Island The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues Joint Resolution for Congressional Disapproval of NLRB Representation Case Procedures (S.J. Res 8) 18 Introduced in the House by Representative John Kline (R-MN), Chairman of the House Education and Workforce Committee, and in the Senate by Lamar Alexander (R-TN), Chairman of the Health Education, Labor and Pensions Committee, the resolution use the Congressional Review Act (CRA) to disapprove of the NLRB’s “Ambush Election” rule. S.J. Res.8 passed the Senate by on March 4 by a vote of 53 to 46 and passed the House on March 19 by a 232 to 186. For the resolution to be effective, the resolution must be signed by the President, or in the case of a veto, override the President's veto by two-thirds of both Houses of Congress. President Obama vetoed the legislation on March 31, 2015. The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues Americans Approve of Unions but Support “Right to Work” Union approval at 53% while 74% favor right to work laws 19 Source: Gallup August 28, 2014 The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues National Labor Relations Board Final Rule to Amend Representation Election Procedures 20 Final rule was reissued by the NLRB in the Federal Register on December 15 and is nearly identical to regulations proposed in 2011. The Rule is scheduled to go into effect on April 14, 2015. The rule revises the process for union representation elections, expediting the period of time between the filing of NLRB election petition and the election itself. The regional director could set a pre-election hearing to begin seven days after a hearing notice is served and a post-election hearing 14 days after the tally of ballots. Provides for the electronic filing and transmission of election petitions. Employers will be required to turn over private employee information to the NLRB and the petitioning party, including employee telephone numbers and e-mail. The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues SHRM filed a lawsuit on January 5 challenging the legality of the rule. In particular, the lawsuit raises the following issues: > > > > 21 Shortened time frame between the filing of an NLRB representation case petition and election; Failure to establish a record supporting new election rules; Detrimental changes to the Board election proceedings and; Changes to voter list rules infringe on employee privacy rights. 96 SHRM state councils and chapters and over 4,600 individual members submitted their own comments to the NLRB during the comment period on the rule. SHRM member Roger King of Jones Day testified before the NLRB in April 2014 on these issues. SHRM member Steve Browne also testified before the House Education and Workforce committee on the rule in March, 2014. The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues Department of Labor Proposed Rule to Amend 541 Overtime Regulations 22 President Obama sent a presidential memorandum to the Department of Labor (DOL) on March 13, 2014, directing Agency to “modernize” and “simplify” the Section 541 rules. Under the FLSA 541 Regulations, an employee qualifies as exempt from overtime if he or she satisfies a “duties test” (under the Executive, Administrative, Professional, Computer and Outside Sales regulations) and the employee is paid on a “Salary Basis.” Although we have not seen a proposal, we understand the changes may include doubling the “Salary Basis” amount from $455 dollars a week ($23,660 annually) to $910 dollars a week ($47,320 annually). The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues 23 Proposal will also modify the “duties test” making changes to definitions and possibly changing key terms and elements, particularly in the “primary duty” area. DOL held a series of listening events over the last several months, four specifically with SHRM and our members. Proposed rule is anticipated to be released by DOL in the first quarter this year. The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues Department of Labor Executive Order on Fair Pay and Safe Workplaces Act under the Federal Acquisition Regulations Signed by the President on July 31, the Executive Order requires prospective federal contractors and their subcontractors (with contracts valued at more than $500,000) to disclose to the government, labor violations of 14 different federal and state labor laws and the equivalent state laws that occurred during the previous 3-year period of time. Laws covered include the FLSA, OSHA, the NLRA, Davis Bacon, the Service Contract Act, 503 of the Rehabilitation Act, USERRA, FMLA, Title VII of the Civil Rights Act, the ADA, ADEA; among others. Contractors must disclose whether any of the following has been rendered against them for: > > > 24 Administrative merits determinations Arbitral awards or decisions Civil judgments The Washington Outlook from the California Employers Perspective Labor-Management/Civil Rights Issues 25 Federal contractors would also be required to disclose to each individual employee their particular classification as an independent contractor or employee. The order would also prohibit employers with federal contracts of at least $1 million from requiring employees from entering into pre-dispute arbitration agreements for disputes arising out of Title VII of the Civil Rights Act or from torts related to sexual assault or harassment. The Executive Order is effective immediately but applies to any contracts entered into on or after final regulations go into effect. The proposed rule has been sent to OMB and we expect it to be issued sometime this spring. The Washington Outlook from the California Employers Perspective Health Care Reform Issues 2015 Public Policy Agenda – Health Care Reform Supreme Court is expected to decide case on the constitutionality of health care credits for coverage purchased through public exchanges in King v. Burwell. Successful PPACA repeal in 2015 unlikely but 114th Congress will pursue several changes: > > > 26 Definition of Full Time Application of Excise Tax Protection of Employer Wellness Programs Second PPACA enrollment period for exchanges ended on February 15. Congressional oversight and regulatory guidance continues. EEOC proposed regulations on wellness programs. Tax-deferred status of health care benefits could become a target in tax reform in Congress. The Washington Outlook from the California Employers Perspective Health Care Reform Issues Premium Costs Likely to Rise if Supreme Court Strikes Down Subsidies for States Operating on Federal Exchanges 27 The Washington Outlook from the California Employers Perspective Health Care Reform Issues 2014 to 2015 Change in Organizations’ Overall Health Care Coverage Costs Change in Costs Percentage Increase in Costs Decrease 6% Of organizations that reported decreased costs, 84% saw a decrease of 10% or less. Stay the same 17% Increase, 77% 1% - 5% 6% - 10% 11% - 15% 16% or more Note: n = 687. Respondents who answered "don't know" or "not applicable" were excluded from this analysis. 28 21% 38% 16% 24% Note: n = 492. Only respondents who indicated a change in the costs from 2014 to 2015 were asked this question. Percentages do not total 100% due to rounding. Source: Health Care Reform—2015 Update ©SHRM 2015 The Washington Outlook from the California Employers Perspective Health Care Reform Issues Will Your Organization Restructure Its Health Care Options to Avoid the Excise Tax? The excise tax (“Cadillac tax”): A tax scheduled to take effect in 2018 to reduce health care use and costs by encouraging employers to offer plans that are cost-effective and by engaging employees in sharing in the cost of care. It is a 40% tax on employers that provide high-cost health benefits to their employees. Yes, we have made changes to our plan to avoid the excise tax 9% We are/will be conducting analyses and exploring different health care… 24% We have not yet begun to consider the issues around the excise tax 13% We are awaiting guidance on the excise tax before making any changes 14% Not applicable; we did not ever offer a health care plan that would… Don't know 20% More than onehalf of organizations (53%) will not be affected by the excise tax or are taking action to avoid the tax. 19% Note: n = 714. Percentages do not total 100% due to rounding. 29 Source: Health Care Reform—2015 Update ©SHRM 2015 The Washington Outlook from the California Employers Perspective Health Care Reform Issues As a Result of the ACA Employer Mandate Has Your Organization Considered Reducing the Number of Hours Worked for Some Full-Time or Part-Time Employees? Yes, we have already reduced employee hours Yes, we plan to reduce employee hours Yes, but we have decided NOT to reduce employee hours No, we have not considered reducing employee hours 2% 14% 1% 6% 6% 8% On average, 19% of employees were affected at organizations that reduced or plan to reduce hours. Full-time employees (n = 688) Part-time employees (n = 607) 91% 72% Note: Respondents who answered "don't know" or "not applicable" were excluded from this analysis. 30 Source: Health Care Reform—2015 Update ©SHRM 2015 The Washington Outlook from the California Employers Perspective Health Care Reform Issues Total ACA Exchange Enrollment at 10 Million Analysis 31 The 2014-2015 enrollment period was roughly half as long as the 2013-2014 period, spanning 93 days instead of 182 Original CBO projections estimated 13 million enrollees by the end of the 2015 period; HHS set a lower goal of 9 million HHS exceeded its own goal, with 10 million individuals actually enrolled as of the enrollment period’s closing on Feb. 15, 2015 The Washington Outlook from the California Employers Perspective Health Care Reform Issues Save American Workers Act (H.R. 30) Forty Hours is Full Time Act of 2015 (S.30) Legislation introduced in the House by Representatives Todd Young (R-IN) and Dan Lipinski (D-IL) and in the Senate by Senators Susan Collins (R-ME) and Joe Donnelly (D-IN) to amend the Internal Revenue Code to: > > 32 Modify the definition of “full time” for the hours worked requirement for health care coverage under the Patient Protection and Affordable Care Act from 30 hours a week to 40 hours. Clarify that the number of hours counted toward a "full-time equivalent" employee to be 174 hours per month as opposed to 120 hours per month under current law. The House passed the bill on a bipartisan vote of 252 to 172 on January 8 and was referred to the Senate. SHRM supports the measure. President Obama has threatened to veto the legislation. The Washington Outlook from the California Employers Perspective Health Care Reform Issues Preserving Employee Wellness Programs Act (H.R. 1189 & S. 620) 33 Legislation introduced in the House by Representatives Todd Young (R-IN) and John Kline (R-MN) and the Senate by Senator Lamar Alexander (R-TN) reaffirms that employers legally may offer financial incentives that reduce health insurance premiums for employees who participate in employer-sponsored wellness programs. The bill reaffirms the Affordable Care Act that allows employers to offer wellness programs tied to a financial reward for employees who participate. The bill also clarifies that an employee's spouse may participate in the program as well. Under the legislation, employees would have up to 180 days to request and complete an alternative wellness program if it's medically inadvisable or unreasonably difficult for them to participate in the original program. SHRM supports the legislation. The Washington Outlook from the California Employers Perspective Immigration Reform Issues 2015 Public Policy Agenda – Immigration Reform 34 President Obama signed an executive order in November 2014 granting up to three years deferred deportation and work authorization for up to 5 million undocumented aliens. President Obama has threatened a veto over any attempt by Republican leaders in Congress to rollback the executive order. The 114th Congress is unlikely to move forward on “comprehensive immigration” but will see a series of focused immigration bills on border security, worksite enforcement and possibly, Green Card reform. The H-1B Visas are available beginning next week but the number of applications is expected to be above 172,500 far surpassing the statutory cap of 85,000. The SHRM/Council for Global Immigration partnership is part of the dialogue and advocacy effort. The Washington Outlook from the California Employers Perspective Immigration Reform Issues Immigration Executive Action Refocuses Deportation Efforts, Expands Work Authorization Key Provisions in President Obama’s November 2014 Executive Action on Immigration Pillar of Reform Keep families together and protect those who came to the U.S. as children Actions Taken Change deportation priorities to target severe offenders Modernize immigrant and nonimmigrant visa programs and applications Expands DACA (deportation relief for undocumented immigrants who entered the country prior to the age of 16) to those who are currently older than 30 and to those who entered the U.S. before Jan. 1, 2010 Creates Deferred Action for Parents (DAP) for immigrants who entered the U.S. before January 1, 2010 and have at least one child who is a U.S. citizen or green card holder Grants, under DACA and DAP, work authorization and 3 years of deportation relief for successful applicants Provides provisional waivers of unlawful presence to individuals who have resided in the U.S. for at least 180 days and are the children of U.S. citizens or the spouse or children of lawful permanent residents Reforms “Secure Communities” program (current Administration policy on immigration enforcement, requiring local authorities to send information of any individual arrested and fingerprinted to be sent to Homeland Security for potential deportation) to only focus on deporting serious criminals and repeat offenders Targets immigrants who have entered the U.S. or were already ordered to be deported in 2014 Clarifies and investigates a number of rules regarding visa availability and national interest waivers Authorizes parole, on a case-by-case basis, to eligible investors, researchers, and entrepreneurs, who would otherwise be ineligible for a national interest waiver Allows application fees to be paid by credit card Analysis 35 President Obama signed the executive order in response to outcry from members of the Democratic base and Latino communities frustrated at a lack of progress on immigration after the 2012 election cycle The executive action has faced limited criticism from a policy perspective, but backlash regarding potential executive overreach from Republicans in Congress (particularly given the timing of the order immediately following major Democratic losses in the 2014 elections) looks to be setting up a fight in the 114th Congress to potentially repeal the action The Washington Outlook from the California Employers Perspective Immigration Reform Issues The Legal Workforce Act (H.R.1147) Introduced in the House by Representative Lamar Smith (R-TX) and Chairman of the Judiciary Committee Bob Goodlatte (R-VA), the Legal Workforce Act is focused on worksite enforcement. The legislation would real the current paper-based Form I-9 and require employers to participate in an electronic verification system. Federal contractors to use the system on the date of enactment. Participation by other employers would be as follows: > > > > 36 employers with 10,000 or more employees,6 months after enactment; employers between 500 and 10,000 employees,12 months after enactment; employers between 20 and 500 employees,18 months after enactment; and employers with less than 20 employees, 24 months after enactment. Agricultural employers would not be required to use the system 36 months after enactment. The Washington Outlook from the California Employers Perspective Immigration Reform Issues 37 Employers would attest through the electronic verification system that they had examined the new hire’s employment and identification documents to ensure authenticity. The bill also allows employers to do the attestation on paper as well. Employers would be required on the date the offer of employment is extended and ending at the end of the third business day after the employee has been hired, to use the employment verification system. The offer of employment may be conditioned on passing the verification system. Employees would be required to attest they are authorized to work legally in the U.S. and would face criminal sanctions of up to two years in jail and civil penalties for violations of the attestation provisions. Creates a knowledge based authentication pilot program to address the issue of identity theft and the use of fraudulent documents in the employment verification process. Employers can access the pilot within 24 months of enactment. The Washington Outlook from the California Employers Perspective Immigration Reform Issues 38 The legislation would allow federal immigration law to preempt any state law in regard to: 1) employer fines for immigration-related issues or 2) requiring employers to verify work status or identity for work authorization purposes. States could, however, continue to award business license on the basis of compliance with the federal system. However, state law enforcement would be allowed to enforce the federal provisions and collect the fines. The House Judiciary Committee approved the Legal Workforce Act by a vote of 20 to 13 on March 3. The Washington Outlook from the California Employers Perspective Immigration Reform Issues CFGI and SHRM will Continue to Educate and Advocate RECRUIT AND RETAIN TALENT 39 TOOLS TO HIRE A LEGAL WORKFORCE The Washington Outlook from the California Employers Perspective Tax and Benefits Issues 2015 Public Policy Agenda 2016 Federal Budget Process > > > Federal National Debt > > 40 A “CRomnibus” was signed into law to fund most of the government through 2015. Funding for DHS was provided under a separate bill as a result of the fight over President Obama’s Executive Order on Immigration . Both the House and Senate are trying to pass a unified budget resolution in April/May to set the budget and spending parameters for 2016. Fights likely to occur over sequestration caps, limits on defense spending and Better projected deficit of $486 billion in 2015 but current federal debt is over $18 trillion dollars. Deficit projected to hit $1.1 trillion a year by 2025. Treasury Secretary Jacob Lew indicated that the U.S. had reached the statutory debt limit on March 15. The debt limit will need to be extended by the fall to prevent default. The Washington Outlook from the California Employers Perspective Tax and Benefits Issues 2015 Public Policy Agenda Tax Reform > > > > > 41 Congressional leaders and the White House have signaled that tax reform is an area of potential bipartisan work in the 114th Congress. Significant changes to employer sponsored benefits are part of the tax reform discussion. Senators Hatch and Wyden launched an effort earlier this month to explore tax reform. SHRM is engaging the Savings and Investment working group to discuss impacts of changes to the tax treatment of retirement plans. Senate & House Concurrent Resolutions on Retirement to be introduced within the next two months. Any tax reform efforts will need to take place within a very small window, likely June – July. The Washington Outlook from the California Employers Perspective Tax and Benefits Issues Tax Increase Prevention Act of 2014 (P.L. 113-295) Signed into law by President Obama on December 19, the law retroactively extends several tax provisions through December 31, 2014. These include: > > > > 42 Employer-provided transit and vanpool benefits from $130 to $250; Employer wage credit for activated military reservists; Work Opportunity Tax Credit, which allows businesses to claim a tax credit equal to 40 percent of the first $6,000 of wages paid to new hires of one of eight targeted groups; Employer wage credit for activated military reservists; The law also allows sponsors of multi-employer pension plan to take an additional five years to amortize their funding shortfalls to these plans. Multi-employer plans that are deemed in “endangered status” (generally less than 80% funded) or “critical status” (generally less than 65% funded or the plan is expected to become insolvent within a certain period) are provided additional flexibility in meeting their funding obligations. These provisions both expire on December 31, 2015. The Washington Outlook from the California Employers Perspective Tax and Benefits Issues Exclusions from Taxable Income Account for Most Tax Expenditures Total: $461B $33B Capital gains on assets $43B Social Security and other benefits FY 2013 Cost of Major Tax Breaks Pension contributions and earnings $137B Total $186B Employersponsored health insurance $248B Charitable contributions Total $161B $39B Mortgage interest $70B $161B State and local taxes $77B Exclusions from Taxable Income Total $118B Child tax credit $57B Earned income tax credit $61B Tax Deductions Preferential Rates on Capital Gains and Dividends Tax Credits Analysis 43 The top 10 most expensive tax expenditures will cost the federal government roughly $900B in FY 2013 Both Republicans and Democrats have recently considered eliminating or limiting these tax breaks as a way to generate revenue The Washington Outlook from the California Employers Perspective Michael P. Aitken Vice President Government Affairs [email protected] Twitter: @SHRMVPAitken 1800 Duke Street Alexandria, VA 22314 +1-703-535-6027 Direct 44
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