Mills administration releases plan to avoid Maine taxing most Paycheck Protection Program loans
The administration said the proposal would match the federal government’s double benefit on the first $1 million of Paycheck Protection Program loans received
AUGUSTA, Maine (WMTW) - The Mills administration on Tuesday released a plan that would avoid taxing most Paycheck Protection Program loans that thousands of Maine businesses received.
Under the plan, the state would extend full tax relief to more than 99% of Maine businesses that received help from the Paycheck Protection Program.
The administration said the proposal would match the federal government’s double benefit on the first $1 million of Paycheck Protection Program loans received.
The governor said that would result in full tax relief for Maine’s small businesses who need it most and partial relief to those Maine businesses that received more than $1 million in Paycheck Protection Program loans.
“We recognize the incredible hardship these businesses have endured and, as we have throughout this pandemic, we want to ease their burdens and allow them to stay open and keep people employed. With this proposal, we are matching the measure enacted by the Congress in late December to deliver full tax relief to 99% of Maine businesses that received PPP in order to do the most good for the most businesses and the most employees,” Gov. Janet Mills said.
Mills said the proposal seeks to strike a middle ground between those who oppose conforming to the federal government’s double benefit and those who support full conformity, while ensuring that tax relief is delivered to Maine’s most vulnerable businesses.
The state said an analysis showed that 26,683 Maine businesses received Paycheck Protection Program loans of $1 million, or less. The state said 251 Maine businesses received Paycheck Protection Program loans of more than $1 million.
The Mills administration faced criticism when last month it was announced Paycheck Protection Program loans would be taxed by the state and would result in $100 million in revenue.
Mills said the proposal would cost the state $82 million in revenue. The plan calls for making up the money by using surplus funds previously designated for the “rainy day fund,” along with other funds.
The Paycheck Protection Program loans are not subject to federal taxes.
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