BOSTON (SHNS) – Massachusetts House on Thursday unanimously approved sweeping tax breaks, emergency paid sick leave, and an unemployment system funding bill that would mitigate the unemployment insurance premium hikes that will hit businesses in the coming weeks.
Both laid-off workers and employers are given access to tax breaks under Act (H 89), which builds on a proposal by Governor Charlie Baker to stabilize the state’s unemployment system, and also includes provisions such as creating a paid sick leave program for employees affected by COVID -19 are affected, and tax breaks for loans granted under the Paycheck Protection Program starting in 2020.
The bill would freeze an interest rate plan, imposing smaller increases in unemployment taxes companies pay in 2021 and 2022. It would also approve $ 7 billion in borrowing to maintain the solvency of the depleted unemployment fund and repay federal loans, as well as impose a separate surcharge on businesses to meet federal interests.
House spokesman Ron Mariano told reporters after the bill was passed that the bill is always about getting people back to work.
“We’re trying to help small businesses get back on their feet,” said Mariano. “The more money we can keep in and under the control of small business owners, the better off we will all be. It enables them to hire more people with the rate freeze, the forgiveness of the PPP material enables them to keep capital. All of this goes into hiring people. “
The House voted 155-0 for the bill. Four lawmakers – Republican Representatives F. Jay Barrows from Mansfield, Angelo D’Emilia from Bridgewater and Donald Wong from Saugus, and Independent MP Susannah Whipps from Athol – voted in attendance.
Senate chairmen expect to take up the bill next week and have already expressed their support.
The state’s unemployment system is funded by contributions from companies, which may increase depending on the number of times an employer’s employees seek assistance.
COVID-19 and the associated far-reaching changes in public life triggered a tidal wave of unemployment that reached a nationwide unemployment rate of 17.7 percent last June. Demand wiped out the Unemployment Insurance Trust Fund, which deteriorated from $ 1.6 billion in February 2020 to $ 2.2 billion in the red by year-end.
In its most recent monthly report, the State Department of Unemployment Assistance forecast the trust fund’s year-end deficits of $ 4.7 billion in 2021, nearly $ 5 billion in 2022, $ 4 billion in 2023, and $ 2.9 billion . USD in 2024.
That poor outlook is expected to trigger a shift in the tax rate plan that, if left unchecked, would increase the average cost per employee for businesses from $ 544 in 2020 to $ 866 in 2021, an increase of nearly 60 percent.
The legislation would freeze the pay plan in 2021 and 2022, setting the average cost per employee at $ 635 in 2021 and at $ 665 in 2022, according to the Associated Industries of Massachusetts.
It would also authorize the state to tie up up to $ 7 billion to keep benefits flowing and repay the more than $ 2.2 billion the state has borrowed from the federal government for unemployment so far.
The interest rates on municipal bonds are below the 2.27 percent interest rate on the federal loans, and proponents say the move will allow Massachusetts to save money in the long run.
“While unemployment has declined, certainly compared to June last year, we definitely still have some challenges ahead of us, and tying up that money will give us the flexibility not to transfer everything to businesses immediately,” said the Chairman of the House Way and Means Committee, MEP Aaron Michlewitz.
Companies would also receive a new surcharge in the form of an excise tax on workers’ wages through December 2022 to repay the interest on the federal loans due in September. Rep. Josh Cutler, co-chair of the Labor and People Development Committee, told Intelligence that the addition would result in an average cost of $ 57 per employee in 2021 and $ 66 per employee in 2022.
“Even with this added employer bonus, our actions today will save companies in Massachusetts money,” Cutler, a Democrat from Duxbury, said on the floor of the house.
The bill also contains several other important sections.
It would create a tax credit for those on unemployment benefits with a household income less than 200 percent of federal poverty and waive penalties for missed tax payments on those benefits in the past year. The total tax credit is $ 30 million for the 2020 tax year and $ 20 million for the 2021 tax year.
Corporations would also be exempt from the need to pay state taxes on federal paycheck protection program loans issued, a move that Republican lawmakers have highlighted as a major relief in recent weeks.
“When many companies applied for PPP loans, they were in the midst of survival. They weren’t thinking about next year, ”Michlewitz, a North End Democrat, told reporters. “They didn’t think about what tax decision they would have to make in the future. They thought about how they would stay open in the midst of an economic shutdown. To protect these small businesses and allow them to get back to where they were in the short term and long term, lending here and tax forgiveness here is an appropriate step. “
A year after the pandemic started, the house has billing the language that is creating a COVID-19 emergency sick leave program that is used to provide benefits to employees who receive COVID-19, quarantine or one of have to look after a family member affected by the disease.
Full-time workers could access 40 hours of paid time off, while part-time workers’ leave would vary depending on the schedule. Employers with fewer than 500 employees can access federal tax credits to help cover costs.
Before the bill was approved, the House rejected an amendment proposed by Rep. Erika Uyterhoeven of Somerville, which would have offered affected employees two weeks of COVID-19 vacation.
Members also voted 152-4 to launch another Uyterhoeven amendment aimed at preventing tax breaks for companies that had received PPP loans.
Baker first submitted a version of the bill in December that only included the changes to the user interface, and then re-submitted his proposal in January when the new session began. Large corporate groups such as AIM and the National Federation of Independent Businesses supported this measure.
“By passing these laws, we can use a much cheaper funding mechanism to borrow money and repay the fund,” Baker said of the bill on Wednesday.
The Republican governor has not commented publicly on sections that were included in the package by Democratic leaders, such as the COVID-19 sick leave or the unemployed tax credits.
The House of Representatives vote came after Senate Republicans delayed implementation of a revised climate change bill. The passage of the Auxiliary Law to Prevent Taxation of PPP Loans should come “immediately” before other matters.
“Unless lawmakers take action, these companies will be forced to pay substantial additional taxes through tax returns due March 15, rather than spending those dollars fighting for the survival and employment of the thousands of Massachusetts residents The Payroll Protection Program was designed to protect, ”wrote Sens. Bruce Tarr from Gloucester, Ryan Fattman from Sutton and Patrick O’Connor from Weymouth. “If we don’t act in a timely manner, Massachusetts employers and employees will have incalculable difficulties.”