Guest Post from Doug Holmes of UWC Strategic Services on Unemployment and Workers’ Compensation
On Monday, December 9, 2013, a coalition of national and state business organizations urged the U.S. Congress not to increase the Federal Unemployment Tax (FUTA). Arguing that the tax should not be increased in light of already increasing state and federal payroll taxes, which were triggered by high unemployment claims levels and outstanding state loans, the coalition submitted this letter: UI Business Letter Opposing FUTA Increases 2013 12-9.
In it, the coalition asked that there be:
- No increase in the FUTA tax base or rate
- No extension of federal restrictions on states in adopting measures that would reduce the average weekly benefit amount as a part of state unemployment solvency legislation
- No increase in direct spending from employer financed federal unemployment trust fund accounts that are already deeply in deficit
Across the nation employers are experiencing dramatic increases in their tax burden related to unemployment compensation. Many employers have seen their state experience rate increase, higher state solvency taxes, an increase in assessments to pay for interest on outstanding loans, increases in their federal unemployment taxes and debt service payments in support of bonds and other financing to pay off large outstanding state debts.
The proposed FUTA tax base increase from $7,000 to $14,000 would immediately increase state unemployment insurance taxes in 29 states – some of which already have healthy state UI trust fund balances.