BIA Business Perspective: 2021 Legislative Recap
BIA Business Perspective: 2021 Legislative Recap
By David Juvet and David Creer
With passage of a new two-year state budget, the 2021 legislative session is over. Here’s a look back from BIA’s perspective.
2021 was an extraordinary year for business tax reform, a top priority for BIA. The budget included significant reductions in both the business profits tax (BPT, New Hampshire’s corporate income tax) and business enterprise tax (BET, a tax on payroll). When they go into effect in 2022, the new tax rates of 7.6% for the BPT and .55% for the BET will be the lowest in more than 20 years. The Legislature also raised filing thresholds for the BPT to $92,000, and $250,000 for the BET. This means if small businesses don’t hit these thresholds, they don’t have to file a tax return at all.
The Legislature also helped companies that received federal Paycheck Protection Program loans that were forgiven by the federal government. New Hampshire’s Department of Revenue Administration (the state’s IRS) released an advisory last January making it clear any revenue from loan forgiveness would be taxable under the state’s BPT. This was not something businesses, many already staggered by the pandemic, were anticipating. In some cases, employers had no ability to pay the tax. At BIA’s urging, Senate leaders wrote an exemption from state taxation for forgiven PPP loans. This was another significant victory for businesses.
BIA also successfully urged Gov. Chris Sununu to end the waiver that allowed those receiving unemployment benefits during the pandemic to avoid looking for work at all; and to end the $300 per week extra stimulus money from the federal government. With the lowest unemployment rate in the country and New Hampshire employers desperate to find workers, both measures are now helping incent the unemployed to seek employment.
Despite these victories, there were also several lost opportunities. The most notable was failure of the New Hampshire House to pass “Right to Work,” another top legislative priority for BIA. Right to Work (RTW) simply means no employee can be forced to join or financially support a union as a condition of employment. Twenty-seven states are already RTW states; New Hampshire could have been the first in the Northeast.
BIA fought for this legislation because we believe organized labor should be held to the same standard as BIA, local chambers of commerce, and trade associations by having to prove the value of their work to members every day, just like we do. BIA’s work benefits businesses all over the state, yet none are forced to pay BIA dues. Why aren’t labor unions in the private sector held to the same standard? Public sector employees at all levels of government already enjoy the benefits of RTW through a 2018 U.S. Supreme Court ruling. Unions representing employees in the public sector must demonstrate value to members and prospective members or risk losing them. Further, many companies based in New Hampshire and elsewhere will only grow or expand operations in RTW states. The New Hampshire Senate passed RTW legislation, but too many House members stood with labor unions in voting against the bill, and it failed. This was truly a lost opportunity. As Samuel Gompers, founder of the America Federation of Labor (AFL) once said, “No lasting gain has ever come from compulsion.” BIA couldn’t agree more.
BIA also was disappointed that House and Senate members chose to “back-burner” another BIA priority: establishing a legal “safe harbor” to protect employers who’ve acted in good faith during the pandemic, by complying with state and federal health guidelines, from becoming targets of unwarranted COVID-19-related litigation. Twenty-seven states felt this protection for employers was reasonable and passed safe harbor legislation. Not so in the Granite State. Some lawmakers argued such protections aren’t needed because there haven’t been any COVID-19 lawsuits filed in the state. But that’s like saying, “Hold off getting auto or homeowners’ insurance until after you have a car accident or house fire.” It doesn’t make sense.
If no lawsuits are filed, having a legal safe harbor “on the books” does no harm. But without safe harbor protection in place, even a frivolous lawsuit could cost an employer $50,000 or more to defend against. While the economy is returning to full strength, no business, particularly small businesses struggling to regain lost ground, should be subjected to a meritless lawsuit. Thankfully, rather than killing the bill, both the House and Senate retained it. Hopefully, creating a legal safe harbor will be taken up early in the 2022 legislative session and passed into law.
There were many other bills from the legislative session just ended that impacted employers. Many were killed, some were passed, others are in “limbo.” For a complete rundown, visit our website in late September when we publish our annual Legislative Scorecard/Victories & Defeats for New Hampshire Businesses.
David Juvet is senior vice president of public policy for the BIA. David Creer is director of public policy for the BIA.
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