Gov. warns of 950% tax increase on businesses if unemployment fund isn’t replenished

Governor Tate Reeves is asking lawmakers to use a portion of Mississippi’s CARES Act funding to avoid a surge in taxes on small businesses. 

In recent months, the COVID-19 pandemic has led to a surge in unemployment claims in Mississippi. Hundreds of millions of dollars have been paid out by the Department of Employment Security through the unemployment trust fund, and if it’s not replenished, Governor Reeves warned of the possibility of a tax increase of 950% on small businesses.

“Right now, if you’ve got 50 employees you pay about $1,400 under the current tax. If unemployment hits projections, that same small business would pay more than $13,000. You could pay half a dozen Mississippi cashiers their monthly wages with that amount of money—instead it’s gone in taxes that could be avoided.”

During Thursday’s press briefing, the Governor requested $500 million in CARES Act funding from the legislature to replenish the funds to avoid placing the burden on Mississippi businesses. 

“This is the worst possible time to raise taxes, and since the legislature got control of the CARES funds they are the only ones that can prevent it. This is exactly what the CARES Act is for: unbudgeted expenses. Can you imagine raising taxes on small businesses right now? It’s workers, customers, and families that will hurt,” he said.

Wednesday, Speaker of the House Philip Gunn expressed support for replenishing the fund with CARES Act money. 

Mississippi has $900 million of CARES Act funding remaining after $300 million was spent for small business relief efforts. A Senate bill would allocate $150 million for distance learning improvements in Mississippi. 

According to Lt. Governor Delbert Hosemann, eligible expenses under the legislation would include laptop computers and tablets; software, including learning management systems; hotspots or other devices to increase connectivity; security enhancement; professional development; or other items necessary to increase safety and health in classrooms.  The money, as the bill is currently written, would be distributed to school districts based on average daily attendance.