New taxes and other surprises will pop up in lame duck
The “Lame Duck” legislative session refers to the remainder of the current session held after the election, but before newly elected lawmakers will take office next year. These sessions tend to be unpredictable as many House and Senate lawmakers will not be returning to office because they have lost their election, or they are term limited.
Of top concern during these last weeks of the 2020 session are bills to extend Unemployment Insurance benefits from 20-26 weeks without coordination with a federal relief bill that is still being negotiated and attempts to create new local taxes.
NFIB will also be keeping an eye on several other bills harmful to small business that could see action in the Lame Duck session. Included on the list are bills that would create local fuel taxes and registration fees and attempts by locals to collect income tax on remote workers outside their jurisdiction.
Here is a run down on the issues we will be working on:
PPE Tax Credits
NFIB supports the passage of House Bills 6033, 6034 and 6035 that would provide some tax relief for small businesses that have made the effort to keep their businesses safe for customers and employees. These bills would provide a tax exemption or credit for PPE (Personal Protective Equipment) and other materials purchased by businesses to comply with safety measures required during the COVID-19 pandemic.
Unemployment Insurance Benefit Extension
The current extension from 20 to 26 weeks that expires at the end of this year was necessary to codify the governor’s executive orders (that were declared unconstitutional) in order to avoid federal unemployment insurance penalties against employers. However, renewing this extension past the end of this year without coordination with another federal relief act could put Michigan employers on the hook for hundreds of millions of dollars in extended benefits without any federal assistance to offset this cost. We urge the legislature to wait until a federal bill is passed so that any state legislation can coordinate with the terms of that assistance. If this must wait until the next legislative session, it could be done retroactively to avoid any gaps. We also do not support efforts to expand benefit levels during a time when the UI Trust Fund is in the red and borrowing will be necessary to sustain current benefit levels.
Additional help for small business
The governor has asked the legislature to pass $100 million in relief to small business and families during the lame duck session. Although $100 million in relief for business is needed and appreciated, to have the most positive impact on struggling small businesses it needs to be targeted to those sectors forced to close or limit their occupancy. The relief must also be as immediate as possible with minimum paperwork and processing, and the aid should be in the form of grants, not more loans.
Local Road Taxes
We are aware that there will be an attempt to move legislation that would allow local governments to create their own gas tax and vehicle registration fees. Small business owners are against this effort. According to an NFIB survey of members across Michigan, 86% of small business owners oppose this policy. We urge lawmakers to vote against these bills in the lame duck session.
Local Efforts to Collect Income Tax from Remote Workers
We find it ironic that local governments that urged the governor to veto business property tax relief in July (House Bills HB 5761 and HB 5810), are now pushing legislation to exempt themselves from their own income tax laws. That’s because they want to tax remote workers on income produced outside their jurisdiction. We urge the legislature to condition any such temporary tax hikes to the passage of Senate Bill 943, which includes the same tax relief in the vetoed bills 5761 and 5810. This legislation would allow taxpayers, including business owners, to defer, interest-free, summer 2020 property tax assessments until March 1, 2021. We would suggest amending the bill to also suspend any fines or penalties for nonpayment or late payment of the affected property tax levies. Absent these changes, we urge lawmakers to take a pass on these local tax hike initiatives in the lame duck session.
Line 5 Shut Down Resolution
We urge the legislature to pass a resolution condemning the efforts by the Governor and the Attorney General to close the Line 5 pipeline by revoking the 67-year old easement that allows Enbridge Energy to operate the pipeline. The Whitmer administration’s claims that revoking the easement is a separate action from the tunnel project and that Enbridge could continue that project while Line 5 is shut down is absurd and shows a clear lack of concern for the people and small businesses in the Upper Peninsula and northern Michigan.
We understand that other legislation not included in this article may see activity in the lame duck session and we stand ready to be respond on any issues that may impact Michigan small business.