Here comes the unemployment tax increase

Here comes that unemployment insurance tax hike we’ve all been waiting for.

Under state law, the state’s unemployment trust fund is supposed to stand at 1 percent of taxable wages, or about $860 million. The fund has been depleted in the wake of high jobless claims.

As a result, employers will have to pay more to restore the fund to its mandated level, although the commission tried to cushion the blow by spreading the deficit assessment over several years.

Unemployment tax collections still are estimated to rise to $2.3 billion next year; $2.68 billion in 2011; $2.72 billion in 2012, according to commission spokeswoman Ann Hatchitt. Specific rates for employers were not available Tuesday. How much each employer pays varies, largely based on claims against an employer’s account.

Given the speculation that the Commission was going to push the pain as far back as it could, which is to say after the 2010 elections, I commend them for being realistic about the hole we’re in. The story notes for the umpteenth time the unemployment insurance stimulus funds which Governor Perry refused to take and which surely would have made that hole a lot less deep, not to mention the pain of unemployment a lot less stinging for many Texans, but it wasn’t the only thing he did to exacerbate this situation. His suspension of the tax back when times were good but the ditch was visible on the horizon still ranks as one of the dumbest things he’s done as Governor, and that’s not a short list.

“We haven’t been good squirrels. We haven’t put away nuts for the wintertime,” [Texas AFL-CIO Legal Director Rick] Levy said. “In fact, we deplete our fund so that when wintertime comes, not only is there not anything there, but we have to start charging extra. It’s just a backwards way of doing it.”

[Bill Hammond, president of the Texas Association of Business, and] a past chairman of the commission, disagreed. “It’s my view, and the view of the employers, that it’s better to collect as little tax as needed,” Hammond said.

“Stockpiling the money in Austin, Texas is not a good strategy. We’d rather have the money out and working, creating jobs during the good times.”

Well, if that’s really what you want, then this is what you’ll get in the bad times. Hope you appreciate it.

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4 Responses to Here comes the unemployment tax increase

  1. Baby Snooks says:

    Like it or not Perry made the right decision both times. So he didn’t raise the tax in good times. Now he has to raise the tax in bad times. No one expected the bad times.

    The stimulus of both Wall Street and Main Street has been an unmitigated disaster. The bailout of Wall Street alone has cost taxpayers an estimated $23 trillion. Hidden here and there. In the cooked books everyone loves so much. The bottom line of Perry is he doesn’t like cooked books. Or adding needless debt.

  2. John Hall says:

    This runs deeper than “not taking stimulus funds” Those funds came with strings and requirements to extend and increase UI payments after those funds run out which would eventually cause a permanent rate increase to keep the fund solvent. Money never comes from the fed without strings….

  3. Pingback: Unemployment taxes triple – Off the Kuff

  4. Pingback: Eye on Williamson » Perry’s problems this week

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