Business leaders rally against potential tax hikes
Photo | WBJ File
The Massachusetts State House
Business groups are ramping up the pressure on Beacon Hill to use state dollars, not employer taxes, to repay the federal government for an unemployment insurance error committed by the Baker administration.
The Massachusetts Opportunity Alliance, formed last year by a constellation of influential trade organizations, on Thursday rolled out a campaign dubbed "You Broke It. You Fix It." The coalition launched a website and a 70-second video outlining the case against putting the repayment costs on employers.
"Businesses should not bear the financial burden of repaying a debt they didn't cause," the coalition wrote. "If the state government broke it, the government should be the ones to fix our state's UI system."
Under former Gov. Charlie Baker, Massachusetts mistakenly paid about $2.5 billion in unemployment benefits using federal pandemic relief dollars instead of tapping revenues in the employer-funded unemployment insurance trust fund traditionally used for jobless aid.
In January, the Healey administration announced a settlement with the federal government in which Massachusetts will pay back $2.1 billion over the next 10 years. That balance will come from the same unemployment insurance trust fund, so the dollars will be provided by businesses, while state government must cover hundreds of millions of dollars in estimated interest costs.
Healey's office has said businesses will not face higher tax rates on their UI payments through at least the end of 2026. After that, rates could change, but the degree will depend on systemic reforms the administration is exploring.
Founding members of the Mass. Opportunity Alliance include the Pioneer Institute, the Mass. High Technology Council and the Mass. Competitive Partnership. The coalition also counts the Retailers Association of Massachusetts, NFIB Massachusetts, the Mass. Restaurant Association, the South Shore Chamber of Commerce, and the Home Builders and Remodelers Association of Mass. among its ranks.
"Massachusetts businesses already pay some of the nation’s highest UI taxes, yet policymakers want to raise them further to cover misappropriated funds," said Mass. High Tech Council President Christopher Anderson. "Businesses shouldn't bear the cost of a debt they didn't create. Policymakers have expressed interest in much-needed reforms -- we hope they follow through. A better solution is essential to ensure businesses of all sizes can thrive."
Some onlookers have argued that businesses would be on the hook either way, suggesting that if the Baker administration did not make an error, the $2.5 billion in benefits would have come from the same employer-funded UI account.
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