Mo Chamber signs letter opposing the President’s budget which calls for an increase to unemployment taxes

December 7, 2012

The Honorable John Boehner
Speaker
U.S. House of Representatives
Washington, DC 20515

The Honorable Nancy Pelosi
Minority Leader
U. S. House of Representatives
Washington, DC 20515

The Honorable Dave Camp
Chairman
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

The Honorable Harry Reid
Majority Leader
United State Senate
Washington, DC 20510

The Honorable Mitch McConnell
Minority Leader
United States Senate
Washington DC 20510

The Honorable Max Baucus
Chairman
Finance Committee
United States Senate
Washington, DC 20510

Dear Speaker Boehner, Majority Leader Reid, Minority Leaders McConnell and Pelosi, Chairman Camp and Chairman Baucus:

We are writing in support of measures to promote job creation, state flexibility in addressing the solvency of state unemployment trust funds, and to oppose additional federal taxes related to unemployment insurance. In particular, we support:

• No increase in the Federal Unemployment Tax Act (FUTA) tax base or rate;
• No extension of federal restrictions on states in adopting measures that would reduce the average weekly benefit amount as part of state unemployment solvency legislation;
• No increase in direct spending from employer financed federal unemployment trust fund accounts that are already deeply in deficit.

Employers across the country are experiencing dramatic increases in tax burden related to unemployment compensation, including state experience rate increases, state solvency taxes, assessments to pay for interest on outstanding loans, increases in federal unemployment taxes, and debt service payments in support of bonds and other financing to pay off large outstanding state debts.

State unemployment insurance taxes increased from $38.3 billion in 2010 to $51 billion in 2012, a 33% increase in just two years! Employers in 18 states and the Virgin Islands are paying increasing FUTA penalty taxes due to outstanding federal debts. Employers in 14 of these states will be required to pay a FUTA tax rate for 2012 which is double the rate at the end of 2011 and likely to continue increasing for 2013. Employers will be required to pay $105 per employee in Indiana and $147 per employee in the Virgin Islands, dramatic increases from the normal $42 base FUTA per employee tax.

The employer financed federal unemployment account used to pay the federal share of extended benefits is $20 billion in deficit.

20 states currently owe over $26 billion in federal loan debt. In addition, Colorado, Idaho, Illinois, Michigan, Pennsylvania and Texas employers are currently paying or will pay billions in assessments to cover debt service for bonds to repay federal debt.

We urge your support for measures that do not further increase the already increasing unemployment tax burden and provide state flexibility in addressing state unemployment trust fund solvency.

American Staffing Association
Arkansas State Chamber of Commerce
Associated Industries of Arkansas
Associated Industries of Florida
California Association of Hospitals & Health Systems –
Unemployment Insurance Division
California Chamber of Commerce
Colorado Association of Commerce & Industry
Colorado Hospital Association Shared Services
Connecticut Business & Industry Association
Georgia Association of Manufacturers
Illinois Chamber of Commerce
Indiana Chamber of Commerce
Indiana Manufacturers’ Association
Massachusetts Chamber of Commerce
Michigan Chamber of Commerce
Michigan Manufacturers Association
Missouri Chamber of Commerce
National Federation of Independent Business
Nebraska Chamber of Commerce & Industry
New Jersey Business & Industry Association
New Jersey State Chamber of Commerce
North Carolina Chamber of Commerce
Ohio Chamber of Commerce
Pennsylvania Chamber of Business and Industry
South Carolina Chamber of Commerce
Tennessee Chamber of Commerce & Industry
The Association of Commerce & Industry New Mexico
The Chamber of Commerce of Hawaii
The Kansas Chamber
The Maryland Chamber of Commerce
The State Chamber of Oklahoma
Virginia Chamber of Commerce
UWC – Strategic Services

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