BOSTON – State lawmakers stand ready to pass a COVID-19 clawback bill aimed at providing more help to workers and employers affected by the pandemic.
A proposal slated for approval by the Senate Thursday would cut planned increases in unemployment insurance rates, waive state taxes on federal paycheck protection grants, and set up an emergency paid leave program for workers who need time off to cope with COVID to be tested -19, quarantined, or vaccinated.
A similar bipartisan aid package cleared the House of Representatives 155-0 last week but has to pass the Senate before it gets to Governor Charlie Baker’s desk.
Senator Barry Finegold, D-Andover, said tax breaks for workers and small businesses were critical to helping Main Street survive the economic aftermath of the pandemic.
“We’re on the way to recovery in Massachusetts, but we have to do something to help small businesses get back on their feet,” he said. “A lot of these companies have just got out of the pandemic and just can’t afford these increases.”
A billion dollar deficit in state unemployment insurance is likely to increase the rates paid by employers by an average of 60% starting next year.
The proposal would cut planned increases in unemployment insurance taxes for the next two years while also empowering the state to borrow more money from the federal government to help keep the flow of unemployment benefits.
Companies would have to pay a new excise tax on workers’ wages, which lawmakers say will average $ 57 to $ 66 per year to help repay interest on the federal loans. The tax would expire in 2022.
The plan would also allow unemployed workers to exempt up to $ 10,200 in unemployment benefits they received last year from their state taxes if their household income is below 200% of federal poverty.
Employers who have taken out PPP loans granted by the federal government would not have to pay state income taxes on the money.
About 80% of the PPP loans were not granted in the 2020 tax year. Recipients of loans that have been granted have an additional month to apply for a tax extension as they wait for an opinion on the proposal, according to the Treasury Department.
Bruce Tarr, chairman of the Senate Minority in R-Gloucester, said time is running out for companies facing double-digit unemployment tax increases or government taxes on the PPP loans. The deadlines for filing taxes are imminent.
“We should have done this long before the deadline,” he said. “It is imperative to achieve this.”
Tarr has criticized the Senate Democrats for not including the aid package sooner. He and other Republicans used a procedural step last week to block a vote on a climate change bill in response to the delay in the tax break plan.
Legislators tabled dozens of amendments to the auxiliary bill ahead of the Senate debate on Thursday. Tarr said he plans to table amendments to increase penalties for criminals who make false unemployment claims.
“The criminal organizations that do this are taking money away from the people who need it and depleting government resources,” he said.
The COVID-19 aid package is under review as lawmakers work out details on a $ 46 billion budget that includes additional aid to businesses.
Meanwhile, under a $ 1.9 trillion federal pandemic relief package signed by President Joe Biden last week, the state will allocate nearly $ 8 billion to COVID-19 testing and vaccines, Get schools, businesses, states, and local authorities.
Christian M. Wade reports on the Massachusetts Statehouse for the North of Boston Media Group’s newspapers and websites.