Reducing Taxes, Consumer Privacy, Minimum Wage, and More: State Laws that Small Business Cares About

Date: March 03, 2022

Trends in legislation being considered in states across the U.S.

Across the nation, state legislatures consider and pass laws that can profoundly affect small business. Read on to learn more about some of the biggest issues debated in state legislatures in 2022. 

Reducing Taxes 

Persistent challenges like inflation, supply chain disruptions, and staffing shortages have made it a struggle for small business owners to survive and recover. Considering this, many states are recognizing the need to reduce taxes. For example, in Massachusetts on Wednesday, Governor Charlie Baker filed legislation saving Massachusetts taxpayers roughly $700 million, including a higher estate tax exemption and a lower short-term capital gains tax. In Iowa on Tuesday, Governor Kim Reynolds signed into law a flat income tax which will save Iowa taxpayers $500 million. In February, Gov. Reynolds told NFIB that the flat tax would especially benefit small business owners. 

Single Payer Healthcare 

California and New York are two of the most heavily populated states in the nation, containing over 1/6th of the U.S. population between the two of them. Both are considering passing laws that would create universal single-payer health care plans in their states. The California version, which included new taxes on businesses and citizens to pay for the price tag – estimated to be between $314 billion and $391 billion – failed after Governor Gavin Newsom withdrew his support 

The New York version, which would be funded through a progressively graduated payroll-based tax and other taxable income, would require every New York employer to provide comprehensive inpatient and outpatient medical care for all employees. 

Paid family and sick leave 

The federal Family and Medical Leave Act (FMLA) provides employees with 12 weeks of unpaid, job-protected leave per year for specified medical and family reasons. However, many states have passed their own laws requiring employers to offer paid medical and family leave. Eleven states – California, Colorado (family leave starting in 2024), Connecticut, Maine, Massachusetts, Nevada, New Jersey, New York, Oregon (family leave starting in 2023), Rhode Island, and Washington state – plus Washington, D.C. all require paid family and sick leave. Five more states – Arizona, Maryland, Michigan, New Mexico, and Vermont – all require sick leave only. 

Conversely, several states have also passed “preemption” laws which prevent their cities and counties from passing their own more stringent paid medical and family leave laws. Some preemption states have their own state-level family and sick leave policies which they do not want local jurisdictions to be able to replace. 

The states with preemption laws are Alabama, Arkansas, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, and Wisconsin. 

Minimum Wage Increases 

Twenty-six states have increased or will increase their minimum wage in 2022. Only 15 states remain where the minimum wage is the federal minimum of $7.25 per hour. One of those states, Kansas, currently has a bill in its legislature that would increase the minimum wage to $10 an hour in 2023 and gradually increase it to $16 an hour by 2026. Similarly, legislators in Kentucky introduced a bill in January that would increase the minimum wage from $7.25 to $10.50 an hour, with an increase by 2026 to $15 an hour for employers with 25 or more employees (and $12 an hour for employers with fewer than 25 employees). 

In Virginia, the legislature considered  a bill which would exclude businesses with 10 or fewer employers from minimum wage requirements. The bill was defeated in the state Senate in February. This comes after Virginia increased its minimum wage from $9.50 to $11 an hour, with plans to gradually increase it to $15 an hour by 2026. 

The other states that have raised or will raised their minimum wage in 2022 are Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Vermont, and Washington. 

Consumer Privacy Laws 

In the absence of a federal law, 24 different states have introduced bills that would protect consumer data online, similar to laws already enacted in California, Virginia, and Colorado.  

Most recently, a bill introduced in Indiana would allow Indiana consumers to request what information was collected from them by businesses and what of their information the business sold. Consumers may also request that the business correct or delete their information, as well as opt out of the sale or sharing of their information. The Indiana version of the bill would only apply to businesses that collect information on 50,000 or more consumers and have an annual revenue of $25 million or more. 

The other states currently considering similar laws are Alaska, Arizona, Connecticut, Florida, Georgia, Hawaii, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Utah, Vermont, Washington, and West Virginia. 

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