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Canada's 'Free' Parental Leave Is One Reason I Don't Live There

August 30, 2019 in Economics

By Ilya Shapiro

Ilya Shapiro

Sens. Bill Cassidy, R-La., and Kyrsten Sinema, D-Ariz., just unveiled the first bipartisan legislative
proposal for federal subsidies for families after childbirth, which
would “help working families now by funding paid parental
leave or infant care expenses through advancing the Child Tax
Credit.”

The proposal is similar to bills introduced by other members of
Congress — Republican Sens. Joni Ernst of Iowa, Mike Lee of
Utah, Mitt Romney of Utah, and Marco Rubio of Florida, as well as
Republican Reps. Dan Crenshaw of Texas and Ann Wagner of Missouri
— that would allow new parents to tap up to three months of
Social Security payments after the arrival of a child. (Full
disclosure: These bills are modeled after a white paper written by my wife, Kristin Shapiro, a
senior fellow at the Independent Women’s Forum.)

Cue the leftist hysteria. Hours after the Cassidy-Sinema bill
dropped, Sen. Kirsten Gillibrand, D-N.Y., attacked the bill as “another proposal
that would force working families to borrow from their own
futures.” The United States, progressives say, is the only developed country
that doesn’t subsidize parents’ care for newborns.
Well, I’m a citizen of both Canada and the United States, and
the fact that Canada “gives” its citizens parental
leave is one reason (apart from the weather) that I don’t
live there.

The Burden of Employment Insurance

Canada provides paid leave through its “Employment Insurance,” which also supports
workers during unemployment, illness, and family caregiving. I get
why some of its southern neighbors envy this socialist nirvana. Who
wouldn’t want to go on the dole at those times, eh?

But Employment Insurance costs working families dearly. If my
family moved to Canada, my wife and I would pay nearly US$125,000
in added payroll taxes during our lives to fund the program. (You
can find all tax calculations below — and I translated the
loonies into greenbacks.*) That’s a lot of Canadian bacon!
We’d technically split this amount with our employers, but
any economist will tell you an employer payroll tax is really part
of the employee’s tax burden.

As a higher-income household, we’re not a sympathetic
case. But because Canada’s payroll tax – like most payroll taxes — is regressive,
it costs lower-income families a greater share of earnings. A
family in which each spouse makes $35,000 per year, for example,
would pay nearly $110,000 in added taxes, even though its household
income is substantially less than ours. Notably, a whopping
8.4 percent of that, or about $9,000, won’t even
go toward benefits (which they may never use), but …read more

Source: OP-EDS

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