ND1003119

Title: Unemployment Taxes Rise for Businesses

Description: More employers are receiving higher state unemployment tax bills because states have to make more than $1 billion in interest payments this fall.

Page Content: WASHINGTON, D.C. ? Companies around the country are receiving an unexpected and unwelcome notice from their state government: a higher unemployment tax bill, CNN reports. With more than 30 states owe more than $1 billion in interest payments for loans from a federal fund to pay for unemployment benefits.

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Starting in January, businesses also will be hit with between $21 and $63 more per worker in federal unemployment taxes. These increases are the latest unemployment tax hikes as states try to fill their unemployment trust funds decimated by the Great Recession.

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?Unemployment taxes, which were a relatively low bottom-line cost in 2008, are now becoming a significant cost,? said Doug Holmes, president of the UWC Strategic Services on Unemployment & Workers' Compensation. ?It discourages companies from electing to hire new employees.?

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In 2010, companies shelled out close to 28 percent more in state unemployment taxes, said Holmes. Now, states have to come up with interest payments for the funds borrowed from the federal government, and are tapping businesses for the money.

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For example, in July, New York billed employers for up to $21.25 per worker to pay for its $95.4 million interest bill, which upset companies. Even paying an extra few hundred dollars can hurt small businesses, said Mike Durant, New York state director for the National Federation of Independent Business.

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Content Subject: Operations

Formatted Article Date: October 3, 2011

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