President Biden’s State of the Union tax related topics

On February 7, 2023, President Biden delivered his State of the Union address. Among many topics addressed, we picked the following:

No Income tax increases. The President stated that there were no plans on raising income tax rates for income under $400,000 per year.
Billionaire Minimum Tax. Biden reiterated his commitment to a proposal for the Billionaire Minimum Tax. President Biden first introduced the concept of the Billionaire Minimum Tax in his 2023 budget proposal, released in March 2022. The proposal would impose a 20% minimum tax on incomes that exceed $100 million. The 2023 budget proposal noted that the tax would apply only to the wealthiest 0.01% of households. A bill was proposed in the prior legislative session (HR8558) but the bill has not yet been reintroduced in the current legislative session. With a Republican majority in the House, it is unlikely such a measure would be passed.

Paid leave. In his address, Biden gave a shout-out to the needs of working parents and the need for paid sick days and paid family and medical leave. However, unlike his 2022 address, the President did not reference any proposed legislation. There was a recent announcement, signally intent to reintroduce the FAMILY Act, a bill that would establish a national paid FMLA program. HR856 and S274 propose paid family and medical leave for federal employees. The House bill has bipartisan support. The bills would provide up to 12 weeks of paid family and medical leave to federal workers. Currently, paid parental leave is available to federal employees, however, family and medical leave is unpaid. There are two bills that would expand the FMLA to include part-time workers (the Job Protection Act) and certain educational staff (ESP and School Support Staff Family Leave Act). However, these bills do not call for paid family and medical leave.

Non-competes. A topic that has been hot in state legislation, though tangentially related to payroll, received a call out by Biden. The President discussed non-compete agreements and said “For too long, workers have been getting stiffed. Not anymore. We’re beginning to restore the dignity of work…We’re banning those agreements so companies have to compete for workers and pay them what they’re worth.” A non-compete clause is a contractual term between an employer and a worker that typically blocks the worker from working for a competing employer, or starting a competing business, within a certain geographic area and period of time after the worker’s employment ends. The Federal Trade Commission has a proposed regulation (88 FR 3482), published in the Federal Register on January 19, that would provide that non-compete agreements are a form of unfair competition. Unfair competition is regulated by the FTC and thereby the FTC contends that non-competes violate FTC provisions.

The FTC noted that 30 million American workers are bound by non-compete agreements. The public comment period on the proposed rule closes on March 20, 2023.
Unions. The President also put a spotlight on the Protecting the Right to Organize (PRO) Act. Introduced in the prior legislative session (S420), the PRO Act would expand employee rights to organize and collectively bargain in the workplace. Additionally, it would specify that wage deductions for union fees are permissible for all employees who are represented by a union. This would effectively preempt state Right to Work laws. Biden’s mention in the speech may signal a reintroduction of the bill in the current legislative session.

Source: Thompson Reuters / Tax and Accounting

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