Tax Will Automatically go Into Effect Next Year Unless Legislature Acts
The state’s leading small business organization, the National Federation of Independent Business (NFIB), urged the House Commerce and Tourism Committee today to report out legislation that would suspend an upcoming Unemployment Insurance tax hike on Michigan employers. The tax will automatically go into effect next year unless the legislature acts to change the current law.
Included in the Unemployment Insurance reforms adopted during the Snyder administration was a trigger that would increase the maximum taxable wage base of every employee from $9,000 to $9,500 in the next calendar year following the Unemployment Insurance Trust Fund dropping below $2.5 billion. Unemployment Insurance payroll taxes are calculated on an employer’s tax rate multiplied times the wage base. The $500 increase per employee on payroll would result in a hefty tax hike for employers already struggling with the fallout from the COVID-19 pandemic. Because of the impact of the surge in unemployment claims, the trust fund will drop below the $2.5 billion trigger.
House Bill 6136 would suspend the automatic tax increase anytime there is a declared state of emergency that requires any an employer to close or limit its business operations for any period.
“Suspending the tax increase would be consistent with current Executive Orders that do not charge an employer’s account for unemployment claims resulting from COVID-19 impacts,” said NFIB Assistant State Director Amanda Fisher. “The original trigger language never contemplated these extreme circumstances that employers find themselves in through no fault of their own.”
Fisher urged the Committee to report out the bill to the House floor for quick action during the remaining weeks of the September session.