By Tyler Micik
The Tax Committee met earlier this week and discussed several key issues and policy proposals that will not only impact the business community but all Delawareans. Three particular issues discussed were a minimum wage increase, personal income tax, and Secure Choice.
There has been increased talks to raise Delaware’s minimum wage to $10.50 in 2022, with yearly increases reaching $15 by 2025. The reality of this proposal is that it may in fact hurt the people its intended to help. Many businesses, especially small business, have been disproportionately impacted by the pandemic and are still struggling to survive or recover. An increase in the minimum wage could cause some employers to lay off employees and, in some cases, close their doors permanently. A proposal to increase the minimum wage would be more palatable to some business owners when Delaware’s unemployment rate reaches a more reasonable rate such as 3.6% versus the current rate of 5.3%.
HB64 would create new personal income tax brackets for high earners, starting at 7.1% for those making $125,000 and topping out at 8.6% for those earning $500,000. The State Chamber's tax committee believes this bill would put Delaware at a competitive disadvantage when it comes to attracting new business and residents from surrounding states. Delaware is not facing a budget crisis, which would justify such an increase. Moreover, this bill comes at a time when Delaware businesses and employees face unprecedented uncertainty due to the COVID-19 pandemic.
Secure Choice is a proposal by State Treasurer Colleen Davis that would create a State-run IRA program. The plan is projected to cost approximately $400,000 to implement. According to the Treasurer, the program would be designed for any employer that doesn’t already offer their employees a retirement plan and employers who offer a preexisting plan would be exempt from participating. Employees would have thirty days from their date of hire to either enroll or opt out of the plan. The plan would follow the employee if they relocated or changed jobs.
The Chamber is looking for feedback from members on how any of these proposals may impact your company or employees. Please direct feedback to Tyler Micik at email@example.com.