Nevada Weighs Business Tax Increase for Jobless Fund
September 18, 2009
Enough said, right? Nevada, like many states, has a payroll tax that funds unemployment benefits. With state unemployment at 12.5% (third highest in the U.S.), that fund is quickly becoming depleted. Under state law, a tax increase automatically occurs to replenish it, although officials are reluctant to let that happen (but maybe not reluctant enough to actually stop it):
[Assembly Speaker Barbara] Buckley (D) said the unemployment trust fund is to be depleted three months earlier than expected. She said any rate increase should be delayed until economic times are better and then a surplus should be built up to meet the downturns.
Gibbons and Cynthia Jones, administrator of the state Employment Security Division, have asked the federal Labor Department for a loan of an estimated $280 million to carry the state through the rest of the year.
Gibbons is asking that the loan be made interest free. A number of other states have already asked the federal government for loans to help cover the checks to the unemployed.
Senate Minority Leader Bill Raggio, R-Reno, did not have any recommendation on the rates charged to the 60,000 employers. But he said there may be some necessity to have the rate increased.
Employers must pay a tax rate ranging from 0.25 percent to 5.40 percent on the first $26,600 in wages. The rate is based on the employee turnover in the business.
The average rate now is 1.3 percent with the payment at $353 per year per employee.
It’s good to see that both Democrats and Republicans understand that raising business taxes to fund jobless benefits might just worsen the problem.