Voices from Maine: Complying with federal PPP law will assist ailing Maine small companies

Members of the Maine Legislature and Taxation Committee decide whether Maine should tax Payroll Protection Program loans, the granting of loans, and the deductions made on the loans.

We should require lawmakers to pass wage and salary protection program tax regulations that exactly match those of the federal tax law.

The drafters of the federal law stipulated that taxpayers can still claim normal tax deductions for business expenses paid for with PPP funds even when they are forgiven.

We should be demanding the same in Maine.

As an auditor, I am certified in four states in addition to Maine and would like to offer my tax policy experience to the tax committee. My experience in five different countries over a 40-year career gives me a unique perspective on tax and tax policy issues.

Tax policy decisions made now will have positive or negative effects over many years.

Maine’s per capita income ranks 34th in the US. With a base of about 500,000 employees or adults in this category and about 42,000 employing establishments, Maine’s economic engine is clearly a small business.

The record shows that 28,270 PPP loans were made to businesses in Maine. According to the independent Federal Pay website (Federalpay.org/paycheck-protection-program/me/200), the total amount loaned to Maine businesses was approximately $ 2.3 billion, which is an average loan of $ 80,098 per borrower with an average of nine employees.

Maine’s economic engine is a small company. As a state with an economy fueled by commercial fishing, paper and related products, food, shipbuilding, and tourism, among other things, small businesses make up the bulk of employment, with the exception of Bath Iron Works, healthcare, and some headquartered businesses. Small businesses make up the lion’s share of all of the above industries, as shown by Federal Pay statistics at the link provided.

The Maine economy suffered tremendously in 2020, and any recovery from 2020 will be slow and arduous, regardless of tax levies that will only slow a recovery. For the many businesses that will never reopen, charging additional taxes would add insult to injury. a potential fatal blow for those trying to reopen or otherwise struggle to stay open.

The tourism industry, one of the main drivers of the economy, is being weakened by COVID and the pulp and paper industry is being hampered by low demand and low prices. Most, if not all, businesses face lower demand, lower prices, lower profitability, and poor prospects in the short term.

Taxing PPP loan proceeds, which are federally tax-exempt, sends a clear message to businesses that lawmakers are against business and against growth. This will continue to affect Maine business creation and attraction now and in the future, and will drive more youth out of the state to seek better and more achievable opportunities.

Adjusting Maine to federal treatment will remove additional Maine taxation complexities, reduce the tax burden on Maine taxpayers in times of extreme hardship, and show businesses that Maine is indeed “open to business” and business friendly. big and small. If we want Maine to thrive and grow with quality opportunities, we must start with business-friendly tax policies.

Alternatively, Governor Mills has proposed that taxpayers with PPP loans less than $ 1 million be given the full relief discussed above, and taxpayers with loans greater than $ 1 million should not be allowed any deductions on the PPP loan from more than USD 1 million. This proposal would at least remove the onerous state tax for most small businesses.

We should demand that Maine comply with federal law to protect all Maine taxpayers. If lawmakers don’t protect all taxpayers, they should at least protect taxpayers who have borrowed less than $ 1 million, as suggested by Governor Mills.

In addition, taxpayers and their accountants need to fix this immediately so they can file full and accurate tax returns.

Invalid username / password.

Please check your emails to confirm and complete your registration.

Use the form below to reset your password. When you’ve sent your account email, we’ll send an email with a reset code.

” Previous

Maine Voices: State lawmakers face tough choices, historic choices

similar posts