AUGUSTA, Maine — Garrett Martin, executive director of the Maine Center for Economic Policy, released the following statement in response to the governor’s proposal to provide a double tax cut on up to $1 million of PPP grants:
“Every dollar spent on this new tax loophole for profitable businesses is a dollar that won’t be available to spend on public health, schools, communities or Maine families that are struggling during the ongoing pandemic.
“We share lawmakers’ desire to help small businesses that are struggling during this pandemic. This tax policy is a poor way to do it. Maine already has a fair system for taxing grants: Businesses that spent PPP funds on payroll or other legitimate expenses can already write off that spending for a tax break. Allowing businesses to claim another tax cut on the same funds would set a horrible precedent for tax policy in Maine. Lawmakers must say no.
“Given the challenges that lie ahead and continued underinvestment in Maine’s schools, people, and communities, Maine can ill-afford the PPP double tax cut.”
Gov. Janet Mills’ latest proposal creates a new tax loophole that allows businesses to write-off up to $1 million in PPP grants on their income tax filing. Rather than target small businesses, the proposed cap delivers the greatest benefit to larger, profitable businesses and compromises funding for investments critical to Maine’s recovery.
The $1 million cap means that 99 percent of businesses that received PPP funds — including large firms that received the largest grants — will receive the full double tax cut for grants received. For context, the bottom half of PPP recipients received $9,000 on average from the program. These businesses will receive very little benefit compared to the largest firms. The many small businesses that were unable to obtain a PPP loan will get no benefit from this proposal.
Gov. Mills proposal would cost the state roughly $82 million.