October 4, 2023
First major Massachusetts tax cut in over a decade: Top 5 Things You Need to Know
After months of negotiations, the Massachusetts state legislature has finally agreed to pass a tax package that provides…Read More
Posted on February 13, 2014
The Massachusetts House of Representatives approved a stand-alone Unemployment Insurance rate freeze yesterday that would avert an automatic $500 million tax increase on employers that took effect on January 1.
The measure freezing rates at the current Schedule E will now go to the Senate, which last Thursday passed a similar measure as part of a sweeping restructuring of the system that pays benefits to jobless workers. The timing of the Senate debate remains uncertain.
“The House deserves tremendous credit for moving quickly to avoid a catastrophic tax increase on employers,” said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.
“Employers are certainly interested in making long-term reforms to an antiquated unemployment system, but the immediate need is for Beacon Hill to enact a rate freeze before the Department of Unemployment Assistance sends out first-quarter tax bills in April.”
Representative Brian Dempsey, D-Haverhill, chair of the House Ways and Means Committee, acknowledged during debate that House leaders expect to craft a UI reform bill, but that time is becoming short to avert the 33 percent rate increase. Speaker Robert DeLeo, D-Winthrop, has said he would like to link UI reform to a measure to increase the state’s $8 per hour minimum wage.
“The reason we are adopting the freeze today is really one of management because the bills have to go out and if we do not take action today it becomes a very challenging situation,” Dempsey told the House.
The Unemployment Insurance Trust Fund used to pay jobless benefits in Massachusetts currently enjoys a healthy balance of approximately $800 million.
The House approved the rate freeze as part of a larger $154 million spending bill.
Senate leaders said last week that their Unemployment Insurance reform bill is designed to stabilize UI tax rates for most employers and make those rates more dependent on the hiring and firing record of individual companies.
Under the Senate bill:
AIM was disappointed that the Senate did not reduce the maximum duration of benefit weeks from 30 to 26 or increase the time people must work before collecting benefits, but the association expects to place those issues front and center when the House takes up its reform bill.