Tax Conformity for Citizens Now
This is Representative Ted Kryzak with the Weekly Republican Radio Address.
Over the last two-weeks, my colleagues and I on the Tax Committee have been focused on the Supplemental Budget proposed by Governor Mills that would bring our overall budget into balance as is constitutionally required.
We are disappointed that as proposed currently, the Administration is proposing to tax the monies our small businesses received from the Paycheck Protections Program (PPP) as part of a federal relief payment initiative.
As listeners may or may not know, Maine generally conforms to federal tax law.
When federal law changes, Maine must choose to adjust its tax code to achieve any benefits provided by Congress.
The $2 Trillion federal CARES Act, passed by Congress in late December included several provisions to lessen the economic impact of the pandemic on employers.
The Governor proposed taxing those provisions at the state level rather than adhering to federal law.
That means taking an estimated $125 million away from Maine businesses trying to survive and recover from nearly a year’s worth of lost income, revenue losses and worker layoffs.
This is unacceptable. That is why Republicans on the Tax Committee have moved to reject the Governor’s plan and follow the federal changes.
Public opposition to the Governor’s plan was swift and strong, causing her to backtrack. She is now considering some form of conformity if federal monies can be found to cover the cost.
Unfortunately, Republican efforts for full conformity has now been postponed twice by Democrats on the Tax Committee, cutting off debate on a party-line vote both times.
If the Republican proposal is not accepted, Maine small businesses will have to pay state income taxes on any forgiven part of their Paycheck Protection Program (PPP) loans against the bipartisan intent of Congress.
Businesses across Maine applied for and received these loans to ensure they could keep their doors open, even if partially, and employees on the payroll and some Legislative Democrats would have you believe taxing these monies would not result in any hardship to our businesses who are still currently struggling. They have made statements that these businesses should just be able to see an offset to their tax liability with deductions.
If that were the case, why would the administration believe full conformity to the federal guidelines would result in an estimated $100 million dollar cost to the state?
Beyond the unanticipated tax liability of the Administration’s policy, businesses will face additional accounting costs at a time when we all know every penny counts.
Accountants will charge, and taxpayers will incur, unnecessary costs in the form of additional research, guidance, forms, and the necessity of keeping two sets of books (one federal one state).
These PPP loans were designed to help our businesses and their employees, survive until the economy recovers. For many, these loans allowed them to survive, while businesses around them closed or laid off workers.
The longer Maine delays in enacting tax conformity, the higher the burden on Maine taxpayers with the April 15 filing deadline looming.
That is why the legislature needs to act, stop delaying, and conform with federal law, to prevent further damage to the people who will lead our economic recovery.
We all know of small businesses that have closed their doors forever, leaving people unemployed and holes in the fabric of local communities.
Failure to act, and act quickly, will create even more harm and result in more small business closures and unemployed workers.
Let’s work together to pass and implement full tax conformity by the end of February.
This has been Rep. Ted Kryzak with the Republican Weekly Radio Address.
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