The EARN Act Markup

Finance: Open Executive Session to Consider The Enhancing American Retirement Now (EARN) Act, June 22, 2022

With respect, this legislation is almost worse than nothing. We have gone, as a workforce, from defined benefits to defined contributions - but only for those who have enough money to save a portion of income without cutting back on basic needs.

The first 2% of contributions should be automatic and fully funded by employers and have zero vesting. After that, employers should match 2% for every 1% of employee buy-in. The federal government should be equally generous with its employees in FERS. Cap the employee contribution at 2% and the employer at 6% of salary, with up to 3% (half) allowed to be in employer voting or preferred stock.

To achieve real equality, apply these percentages to payroll as a whole and credit to employees on an equal dollar basis. The same rule should be applied to funding OASDI contributions.

Because most employers will want to underfund, create a subtraction value added - net business receipts tax to fund the child tax credit, healthcare (funding either direct care, 3rd party care or Medicare for All) and pension contributions. Taxes can be offset by direct service, but benefit payments and stock purchases must be real and not an accounting trick.

If a sufficient minimum wage and child tax credit were enacted, employees will be able to save money (and will do so in a structured fashion as envisioned in this bill).

AT PRESENT, WORKERS CANNOT AFFORD TO SAVE! 

Refundable savings tax credits are only window dressing for the two-tiered economy. Indeed, it codifies the current situation. Unless this legislation includes increases to the minimum wage and child tax credits above American Rescue Plan Act levels, these provisions are simply window dressing for enacting the usual subsidies to the top 25% of households. The 75% who really need help saving need more than token savings subsidies.

For both of these provisions, the franchise community will cry bloody murder. These are crocodile tears. Franchisors will adjust agreements because their competitors will do so as well. These provisions will also lead to an examination of whether the franchise model still pays if employees are assured adequate retirement, healthcare and family income as the result of tax legislation that delivers basic justice to workers.