A St. Petersburg Times Editorial
[Last modified: Nov 20, 2009 06:16 PM]
No employer can be happy with Florida's nearly 12-fold increase in unemployment compensation taxes next year. It will hit nearly 500,000 of them at a time when they can least afford it. But it's the direct result of Florida's decadeslong addiction to a tax rate far below other states.
The blame belongs with Tallahassee, where in a lack of planning and financial foresight, state lawmakers blithely underfunded the trust fund that holds tax receipts from employers to pay for jobless benefits during a recession.
Florida's politicians chose to believe the Sunshine State's growth economy would never need a serious rainy-day unemployment fund. Well, it's raining. The state's unemployment rate hit 11.2 percent in October. Meanwhile, the Unemployment Compensation Trust Fund is broke. To keep jobless benefits flowing, Florida is borrowing about $300 million every month from the federal government.
Had Florida politicians not been so tax-averse, the state could have been far better prepared. Florida has levied unemployment taxes on the first $7,000 of an employee's wages since 1983, the year Congress established that as the minimum.
Other states smartly indexed their taxable wage base to rising incomes, allowing their unemployment trust funds to track wage inflation. Not Florida. In the United States today, states on average apply unemployment compensation taxes to the first $11,832 of each employee's income, while Florida lawmakers just got around to temporarily raising taxable wage levels from $7,000 to $8,500 starting next year.
But the exponential jump in the tax rate is not because of this new, $8,500 taxable wage base. It's because Florida law has an automatic trigger that increases tax rates if the balance in the trust fund falls below 4 percent of the state's total taxable payroll. Since the trust fund fell far below that trigger, substantial contributions will be needed to replenish it.
The new rates will jump from $8.40 to $100.30 per employee for employers who generally retain employees. For employers with regular layoffs, the maximum rate will rise from $378 per employee to $459.
Even as the trust fund was dwindling, the Republican-led Legislature exacerbated its arrears this year by rejecting $444 million in federal stimulus for expanding unemployment compensation. The leadership didn't want to open the door to more unemployed people claiming benefits.
Yet the National Employment Law Project, a workers' rights organization, estimates that Florida employers would have saved $109 million in taxes in 2011 if legislators had taken the stimulus money. It was another short-sighted move.
Rightardia comment: This is what happens when Republicans cut taxes with abandon. First, it doesn't stimulate the economy because Florida has one of worst unemployment rates in the US.
This is after the state was governed by Jeb Bush for two terms and now another Republican, Charlie Crist, is now governor.
Even in the Bible it talks about seven years of plenty followed by 7 years of famine.
The excessive tax cuts have left the grain silos bare when the famine hit. Florida has already laid off thousands of teachers, police and fire fighters throughout the state because the Republicans that were elected are unable to govern and unable to insist on a sustainable tax base.
The GOP fundamentally has anti-government views because the government is the only institution that exerts control over wayward corporations.
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Netcraft rank: 5288 http://toolbar.netcraft.com/site_report?url=http://rightardia.blogspot.com
[Last modified: Nov 20, 2009 06:16 PM]
No employer can be happy with Florida's nearly 12-fold increase in unemployment compensation taxes next year. It will hit nearly 500,000 of them at a time when they can least afford it. But it's the direct result of Florida's decadeslong addiction to a tax rate far below other states.
The blame belongs with Tallahassee, where in a lack of planning and financial foresight, state lawmakers blithely underfunded the trust fund that holds tax receipts from employers to pay for jobless benefits during a recession.
Florida's politicians chose to believe the Sunshine State's growth economy would never need a serious rainy-day unemployment fund. Well, it's raining. The state's unemployment rate hit 11.2 percent in October. Meanwhile, the Unemployment Compensation Trust Fund is broke. To keep jobless benefits flowing, Florida is borrowing about $300 million every month from the federal government.
Had Florida politicians not been so tax-averse, the state could have been far better prepared. Florida has levied unemployment taxes on the first $7,000 of an employee's wages since 1983, the year Congress established that as the minimum.
Other states smartly indexed their taxable wage base to rising incomes, allowing their unemployment trust funds to track wage inflation. Not Florida. In the United States today, states on average apply unemployment compensation taxes to the first $11,832 of each employee's income, while Florida lawmakers just got around to temporarily raising taxable wage levels from $7,000 to $8,500 starting next year.
But the exponential jump in the tax rate is not because of this new, $8,500 taxable wage base. It's because Florida law has an automatic trigger that increases tax rates if the balance in the trust fund falls below 4 percent of the state's total taxable payroll. Since the trust fund fell far below that trigger, substantial contributions will be needed to replenish it.
The new rates will jump from $8.40 to $100.30 per employee for employers who generally retain employees. For employers with regular layoffs, the maximum rate will rise from $378 per employee to $459.
Even as the trust fund was dwindling, the Republican-led Legislature exacerbated its arrears this year by rejecting $444 million in federal stimulus for expanding unemployment compensation. The leadership didn't want to open the door to more unemployed people claiming benefits.
Yet the National Employment Law Project, a workers' rights organization, estimates that Florida employers would have saved $109 million in taxes in 2011 if legislators had taken the stimulus money. It was another short-sighted move.
Rightardia comment: This is what happens when Republicans cut taxes with abandon. First, it doesn't stimulate the economy because Florida has one of worst unemployment rates in the US.
This is after the state was governed by Jeb Bush for two terms and now another Republican, Charlie Crist, is now governor.
Even in the Bible it talks about seven years of plenty followed by 7 years of famine.
The excessive tax cuts have left the grain silos bare when the famine hit. Florida has already laid off thousands of teachers, police and fire fighters throughout the state because the Republicans that were elected are unable to govern and unable to insist on a sustainable tax base.
The GOP fundamentally has anti-government views because the government is the only institution that exerts control over wayward corporations.
Subscribe to the Rightardia feed: feeds.feedburner.com/blogspot/IGiu
Netcraft rank: 5288 http://toolbar.netcraft.com/site_report?url=http://rightardia.blogspot.com
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