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Pay for Play? Tax Credits for Paid Time Off

Author

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  • Dean Baker

Abstract

Economists are increasingly coming to the recognition that the current downturn is likely to be longer and more severe than they had expected at the time the last stimulus package was approved in February. As a result, there is likely to be interest in additional stimulus in order to boost the economy and lower the unemployment rate. This paper briefly outlines a method for Congress to quickly boost demand in the economy, while at the same time promoting important public ends: an employer tax credit for paid time off. This paid time off can take the form of paid family leave, paid sick days, paid vacation, or a shorter workweek. This tax credit can both provide short-term stimulus and also provide an incentive to restructure workplaces in ways that are more family friendly. It is possible that many workplaces may leave in place changes made to take advantage of this tax credit even after it has expired.

Suggested Citation

  • Dean Baker, 2009. "Pay for Play? Tax Credits for Paid Time Off," CEPR Reports and Issue Briefs 2009-13, Center for Economic and Policy Research (CEPR).
    • Handle: RePEc:epo:papers:2009-13
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    File URL: http://www.cepr.net/documents/publications/pto-tax-credit-2009-03.pdf
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    Citations

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    Cited by:

    1. John Schmitt, 2011. "Labor Market Policy in the Great Recession: Some Lessons from Denmark and Germany," CEPR Reports and Issue Briefs 2011-12, Center for Economic and Policy Research (CEPR).

    More about this item

    Keywords

    economic stimulus; fiscal stimulus; ARRA; recession; paid time off;
    All these keywords.

    JEL classification:

    • H - Public Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • I - Health, Education, and Welfare
    • I1 - Health, Education, and Welfare - - Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • E - Macroeconomics and Monetary Economics
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
    • J - Labor and Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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