Maine employers to see tax increase due to pandemic’s unemployment surge

(The Center Square) – With Maine experiencing record jobless claims due to the COVID-19 pandemic, the state is raising taxes to help replenish the unemployment insurance (UI) trust fund.

The tax increase of $20 million will help to restore the fund, on top of nearly $300 million in federal CARES (Coronavirus Aid, Relief, and Economic Security) Act funding allocated to Maine, said Peter Gore, executive vice president with the Maine State Chamber of Commerce, to The Center Square.

“I don’t think it will close the doors of more businesses,” Gore said. “For some businesses, it’s unplanned – it’s an increased cost of doing business – but I don’t think it’s going to be factor that closes the doors of any business.”

Maine Labor Commissioner Laura Fortman told WGME that most employers will see a $40 increase per employee.

“We want to make sure that both the money is there for the people who need it, as well as to make sure for employers, taxes do not dramatically increase at a time we know they’re struggling,” Fortman said. “We worked as hard as possible to make the increase as small as possible.”

Before the COVID-19 pandemic, Maine’s unemployment level was just above 3 percent.

“I think some were taken by surprise, but it cannot be unexpected when our unemployment skyrocketed,” Gore said.

The Maine Legislature modernized its UI fund more than two decades ago to make it more flexible, which has helped it maintain solvency unlike half of the states in country, including New York and California, Gore said.

“It could have been a lot worse, and we have a very solvent trust fund,” Gore said. “You have more than 25 states that went insolvent, and now they’re asking (the) feds to forgive those loans.”

Gore said if that becomes public policy, then states that didn’t go insolvent should be rewarded with financial assistance or incentive from the federal government.

Disclaimer: This content is distributed by The Center Square