Business leaders expended much energy recently giving Republican legislators cover as they turned away the hand of the federal government offering the state $125 million in jobless aid.
The strings attached to those funds were minuscule. Virginia merely had to extend benefits to workers in job-training programs and to increase the number of part-time workers eligible for aid.
The changes would have cost businesses nothing until 2011 and would have resulted in a maximum tax increase of $4.73 per worker per year in 2012. Legislators had the option to roll back the benefits and relieve businesses of even that negligible tax impact once the recession ended.
Perhaps the true cause of business leaders' worries is this: They face a far larger tax hike for unemployment benefits, one that will happen even though legislators refused to change eligibility requirements.
The average annual tax per employee is now $95. That rate is due to rise to $157 next year and reach $220 by 2012. The increases are necessary to replenish Virginia's unemployment fund, which is paying $100 million in benefits per month and is expected to be fully drained around the end of the calendar year.
All states assess taxes on businesses as part of insurance programs to cover the cost of unemployment benefits to people thrown out of work. Only South Dakota and Mississippi have lower rates than Virginia's. The highest rate can be found in Alaska, where businesses pay $707 per worker annually.
Virginia's rates are low in part because the state has historically enjoyed low unemployment and in part because the system is structured to minimize taxes on business. Eligibility requirements for unemployment benefits are among the most restrictive in the nation.
Changes in the tax formula championed by former Gov. George Allen allowed a majority of companies to pay no unemployment insurance taxes at all from 1999 through 2002. The rationale was that companies should not pay into the insurance system if they are not placing demands on it by laying off workers. But how many other insurance programs ever charge a premium of $0?
A sharp uptick in the tax in the midst of a recession is certainly unpleasant, but that's how Virginia's unemployment insurance works. During good times, taxes are extremely low, even nonexistent. When hard times hit, taxes rise through the roof.
If business owners don't like that instability, they could have sought revisions to even out their payments over economic cycles. Instead, they have chosen to dicker over whether their tax rate will be $220 or $225 in 2012.
In the process, they have left thousands of families to struggle with their own financial instability, and those families won't have three years to get prepared.
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Bob McDonnell's Political Games
Subject: The incompetence, dishonesty, and penchant for political self-destruction of the extreme right, pseudo conservatives are on full display this morning and, once again, never cease to amaze!
A word of caution for all of the uncaring, selfish, hardhearted, right-wing, pseudo conservatives out there named Peter. You should consider your actions carefully; as one day, you may find that this economy, your creation, has changed your name to Paul!
Once again, the Republicans are being less than honest in their statements, “That includes possibly making them permanent” and “The dollars would have underwritten benefits for some unemployed part-timers and others who are training for new jobs.”
In reality, $20 million of the $125,500,000.00 of additional federal unemployment dollars will be used through 2010 to provide unemployment benefits to those unemployed part-time workers and workers in training that currently do not receive unemployment benefits. The remaining 105,500,000.00 can be used to replenish the regular unemployment fund, which will need a large cash infusion in the very near future. Virginia’s business leaders should remember that the unemployment fu
Let The Federal Government Take over it
I have an honest concern for those who are unemployed by no fault of their own. It has to be devestating to lose your primary means of income. However, expanding the unemployment benefits can and does make people less committed to finding a new job or any employment at all. I know that jobs are much more scarce right now than normal. My main concern is that once a government program is started or expanded it takes on a life of its own far past its original intent. Later some Politicians will demonize anyone who even discusses the notion of limiting or worst yet eliminate a program that someone has depended for far too long. I am all for a hand up out of dispare but this can easily become another hand out. I have personnally known able bodied people who have been on Food Stamps and SSI for generations and now think of it as a right or entitlement instead of assistance. I do not begrudge those who truly need help, but many will abuse this and become wards of the state. If the Federal Government thinks that the expansion of unemployment benefits is so important, then let the Federal Government take over the whole program, fully fund it and administer it.
CAN they pay more?
Are businesses constrained from paying MORE desire than the present tax per worker if they so? The Pilot has laid off alot of staff the past few months, is there anything preventing the billionaires who own it from contributing more than the etablished minimum?
part-time job seekers
This stimulus money was for part-time workers seeking part-time work and people in job training programs. Not excepting this money does not impact full time workers laid off and looking for full time work. Too many people working part time jobs don't want to look for full time work as it would decrease thier welfare benefits. The same goes for those in job training programs.
My job training program was called college, paid for by me, working full time (9 years to finally complete my degree) and 20 years later still paying off student loans. This entitlement mentality has to end.
The Pilot's editors need to
The Pilot's editors need to go out and try to start a business. Not just a one man operation. Something that requires employees. Until that happens, they will continue to remain clueless. Businesses aren't cash cows.
jjackson,it has
been the legal responsibility of business to provide unemployment benefits since 1935. Since it is to the advantage of businesses to have people with some ability to purchase their goods, it only makes sense that business helps their employees through times of unemployment. Why should businesses have the benefits of collective individual labor without offering benefits beyond mere hourly or weekly pay? I would never have considered owning my own business if I was unwilling to treat my employees as more than low paid, 1 step above slavery, peons. Good employees enable their employer to reap riches. These employees should benefit accordingly. IF a firm's CEO is paid $20,000,000, plus stock options, why do some feel that $33/hr is too much to pay employees within that same firm? Now that's class warfare. The wealthy benefit from the toiling of John & Jane Doe yet if Jane & John ask for health ins., we're told it's too costly.
Operating costs
First, You forgot to mention the special assessment business owners were hit with a couple of months ago.
Second, this ‘tax’ increases by roughly 60% next year then by another 40% the following year.
Who ends up paying for this increase? The customers. Business does not pay taxes-the customers pay them.
Business is ‘dickering’ over the 2012 $5 delta because it adds up. Business does its best to keep operating costs and overhead low to remain competitive.
Many don't realize the amount of taxes business gets nailed with. They half of your payroll taxes (FICA and Medicaid), pay tangible property taxes for tools and operating equipment...
Worker responsibility?
Since when is it the responsibility for businesses to pay unemployment insurance to start with? It's up to the worker to obtain insurance in case they lose their jobs just as they have to do with any other peril.
I see the Pilot is going along with the socialist theme but in reality higher costs to businessses just mean less workers employed by them. The pilot along with the liberal democrat socialist are very free with others money.
Answer
Sheep who buy the lies that they sell!
voting against their interest
The GOP has successfully used wedge issues like gay marriage and abortion to keep their supporters voting against their own interest for years. Now they are blocking common sense unemployment benefits during a recession.
Conservatives.. before you answer back think for second: if you or a family member lost you job today, would you eventually apply for unemployment benefits? and would you still vote GOP while doing so....
Also, would you use Cobra after loosing your job? The GOP has fought further funding for that too.
will someone
please explain to a class of 1st graders; why do any average working class & middle class persons ever support "Big Business" Republicans?