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Tuesday, May 12, 2009

Tax hike urged to cover jobless benefits

UPDATED- According to Kevin Landrigan in the Nashua Telegraph, Commissioner Reardon didn't just ask for a tax increase on her first day in office, she imposed one:
Reardon raised taxes on all businesses to shore up a slumping fund that pays weekly jobless benefit checks.

The temporary tax increase would add one half of 1 percent to the tax rate all employers pay on the first $8,000 of salary for each worker.

All employers pay unemployment tax from 0.1 percent to 6.9 percent depending on several factors with each company's history of using the fund, a key indicator.

The average employer tax rate is 2.2 percent.

For the employer paying the average rate, this tax hike increases the firm's annual cost per employee 23 percent to $216 from $176.

All businesses made their first quarterly tax payment for 2009 last month.

The increase announced Monday applies to the last three quarters starting with a July 1 payment, state officials said.

It didn't take newly swown-in Employment Security Commissioner Tara Reardon long to ask for more money. Tom Fahey reports in the Union Leader that the department will seek higher unemployment taxes to pay for benefits:
Jobless benefits payments from now through March 2010 will exceed the fund's revenues by $155 million, according to an April 24 report on the state's unemployment insurance trust fund. If the deficit occurs, the state would be forced to borrow from the federal government.

Tara Reardon, sworn in yesterday as the state's new commissioner of Employment Security, said the House Labor Committee will be asked to increase the wage ceiling on unemployment taxes, along with other changes to shore up the fund.

Fahey reports that the fund has collected more than it has paid out for six of the past eight years, and that average weekly benefits have doubled over the past 15 years.

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