BOSTON – Companies facing double-digit increases in unemployment insurance and taxes on federal catastrophe loans now breathe a sigh of relief.
A $ 350 million pandemic relief package signed by Governor Charlie Baker last Thursday slashes corporate unemployment insurance rates, waives state taxes on federal paycheck protection program grants, and sets up a paid emergency leave program for workers for which they are can take time off COVID-19 related issues.
An important provision of the bill lowers the planned increases in unemployment taxes for the next two years.
A billion dollar deficit in government unemployment insurance caused by a multitude of pandemic unemployment claims last year was expected to increase the rates paid by employers by an average of 60% from next year onwards.
The plan, signed by Baker, also authorizes the state to borrow up to $ 7 billion from the federal government to help maintain unemployment benefits.
Corporations pay a new excise tax on workers’ wages – which lawmakers say averages $ 57 to $ 66 per worker per year – to repay interest on federal loans. That tax would go under next year.
Additionally, employers who accepted PPP loans that were later granted by the federal government would not have to pay state income taxes on the money. Only 1 in 5 of these loans were granted in the 2020 tax year.
In a letter to lawmakers, Baker said the move “takes a thoughtful and comprehensive approach to providing critical relief to facilitate the Massachusetts people’s economic recovery.”
Business leaders praised the tax breaks and lowered unemployment insurance rates.
Chris Carlozzi, Massachusetts state director for the National Federation of Independent Businesses, said many companies “breathe a sigh of relief” that they won’t be burdened with a huge tax bill when they begin to recover.
“These are two important measures that will directly help combat small businesses that have been hit by the pandemic and are now hoping to fuel the state’s economic recovery,” he said.
The measure signed by Baker also included relief for workers who were unemployed last year or this year, allowing them to exempt up to $ 10,200 from unemployment benefits they received from state taxes when their household income was below 200% federal poverty lies.
Another provision provides for a $ 75 million COVID-19 emergency sick leave program that gives full-time workers 40 hours of paid time off if they become infected and need to quarantine or care for a family member affected by the virus.
“The mandate aptly addresses needs – immunization, isolation and quarantine – that were not addressed in the design of the state’s paid family and sick leave program,” Baker wrote to lawmakers.
However, Baker sent that part of the bill back to lawmakers with the technical changes requested, including a proposed cap on benefits. He also suggested extending a $ 40 per employee tax credit to businesses that don’t qualify for a federal paid vacation program.
Legislators can either accept Baker’s amendments or override them.
Legislature’s Ways and Means Committee is considering Baker’s $ 46 billion preliminary budget, which includes additional relief for businesses and employees.
Massachusetts also expects to receive nearly $ 8 billion in federal funding for testing and vaccines, schools, businesses and local government under a pandemic relief package signed by President Joe Biden last month .
Christian M. Wade reports on the Massachusetts Statehouse for the North of Boston Media Group’s newspapers and websites. Email to [email protected]