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Business Coalition: Don't Increase Unemployment Taxes

Business Coalition Urges Congress Not To Increase Federal Unemployment Payroll Taxes – Citing Increases In Unemployment Taxes And State Solvency Measures

WASHINGTON, D.C., DECEMBER 11, 2012 – A coalition of national and state business organizations yesterday urged the United States Congress not to increase the Federal Unemployment Tax (FUTA) in light of already increasing state and federal payroll taxes that have been triggered by high unemployment claims levels and outstanding state loans.

In a letter to Congressional leadership, coalition members asked that there be
• Maintenance of current Federal Unemployment Tax (FUTA) Rates and Base
• Elimination of restrictions on state solvency measures
• Protection of employer financed federal unemployment trust fund accounts

Employers across the country are experiencing dramatic increases in tax burden related to unemployment compensation, including state experience rate increases, state solvency taxes, assessments to pay for interest on outstanding loans, increases in federal unemployment taxes, and debt service payments in support of bonds and other financing to pay off large outstanding state debts.

State unemployment insurance taxes increased from $38.3 billion in 2010 to $51 billion in 2012, a 33% increase in just two years! Employers in 18 states and the Virgin Islands are paying increasing FUTA penalty taxes due to outstanding federal debts. Employers in 14 of these states will be required to pay a FUTA tax rate for 2012 which is double the rate at the end of 2011 and likely to continue increasing for 2013. Employers will be required to pay $105 per employee in Indiana and $147 per employee in the Virgin Islands, dramatic increases from the normal $42 base FUTA per employee tax.

20 states currently owe over $26 billion in federal loan debt. In addition, Colorado, Idaho, Illinois, Michigan, Pennsylvania and Texas employers are currently paying or will pay billions in assessments to cover debt service for bonds to repay federal debt.

The coalition urged Congress not to further increase the already increasing employer tax burden and provide state flexibility in addressing state unemployment trust fund solvency.



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