LANSING – With Michigan’s unemployment rate still among the nation’s highest, State Representative Jim Townsend (D-Royal Oak) today called on Congress to extend a waiver for loan interest payments to avoid raising taxes on Michigan’s businesses at a time when they can least afford it. Failure to extend the waiver would force Michigan to pay $117 million in interest to the federal government on loans the state used to pay unemployment benefits, which would trigger tax increases on many Michigan businesses.
“Forcing Michigan businesses to pay these taxes right now will slow hiring and kill jobs – that’s the bottom line,” said Townsend, who will introduce a resolution on Tuesday urging Congress to extend the waiver. “The last thing our businesses need is higher taxes and the things our residents need the most are jobs. Extending this waiver gives our businesses a fighting chance to continue to grow and create much-needed jobs for our residents. Raising taxes now would squander the progress we’ve made so far and cut the legs right out from under the economic recovery of the entire state.”
Due in large part of the struggles of the domestic auto industry, Michigan’s residents and businesses have been hit harder than any state in the country by these tough economic times. Michigan had the highest unemployment rate in the country for 49 consecutive months – from April 2006 until May 2010. Michigan’s unemployment rate has exceeded the national average in every single month in the last 10 years. At the end of 2010, Michigan’s unemployment rate was 4th highest in the nation.
To weather this economic storm, Michigan has received roughly $3.8 billion from the federal government in order to pay unemployment benefits to Michigan residents through the unemployment insurance (UI) system.
Townsend’s resolution calls on the federal government to extend a waiver on repayment of interest on those unemployment benefit loans that was granted under the American Recovery and Reinvestment Act. That waiver ended Dec. 31, 2010, and Michigan now must pay $117 million in interest by Sept. 30. If Michigan is forced to repay the interest, many businesses would face a tax of up to $67.50 per employee per year to help pay the federal government back.
“Businesses drive our economy and create jobs, and we must support them,” Townsend said. “Our state, our families and our businesses have faced harder economic times over the last decade than anyone. Michigan has some of the greatest entrepreneurs in the world. If we just give them a little more time to get back on their feet, they’ll be at the forefront leading Michigan’s economic resurgence and will put our residents back to work.”