Reference no: EM133303638

Assume that Congress is considering a new bill called the Paid Parental and Medical Leave (PPML) Act. This statute would create the PPML program, which would provide a financial benefit to employees for parental/medical leave and would be financed by a payroll tax paid by both employers and employees. The program would be administered by the Social Security Administration, leveraging the infrastructure already in place for supporting the Social Security Disability Insurance (SSDI) program. The co-sponsors of the bill claim it is revenue-neutral over 5 years. In other words, they claim that over five years, the revenues from payroll tax rate would offset the costs of the payouts plus administrative costs. All claims would be paid out of a newly established federal Paid Parental and Medical Leave Trust Fund. As a congressional staffer, the Representative you work for has asked you to test whether this program actually pays for itself over 5 years. You make some phone calls and obtain the following projections of the program: Costs and Revenues for PPML (in millions US dollars) Administrative Costs Expected # of claims Average expected claim ($) Total cost of claims Total costs Payroll tax revenue Year 1 $2,988,233.00 456,734.00 $ 6,000.00.