Unemployment Taxes Hinders Companies from Hiring Workers

NEW YORK (CNNMoney.com) -- Employers are getting hit with a massive tax hike at a time when they can least afford it.

Companies in at least 35 states will have to fork over more in unemployment insurance taxes this year, according to the National Association of State Workforce Agencies.

The median increase will be 27.5%. And employers in places such as Hawaii and Florida could see levies skyrocket more than ten-fold.

Many of these hikes happened automatically as prolonged joblessness triggered state laws governing their unemployment insurance systems. But at least seven states voted to raise their taxable wage bases, the level of income subject to unemployment tax. And another 10 are looking at upping the wage bases or tax rates.

The states are scrambling to restore their unemployment insurance trust funds, which cover claims.

State trust funds have been decimated by the Great Recession, forcing a record 26 states to borrow a total of more than $30 billion from the federal government. The numbers are expected to grow to 40 states borrowing $90 billion by 2012, said George Wentworth, policy analyst at the National Employment Law Project.

"States are going to be facing higher unemployment tax rates for some period of time," Wentworth said.

In addition, employers pay federal unemployment taxes. If states don't repay their federal loans, businesses could see their this federal tax go up as well in coming years, said Rich Hobbie, executive director of the National Association of State Workforce Agencies.

Higher taxes, however, dampen employers' ability to hire new workers, crimping any nascent economic recovery. Companies pay taxes on each employee on the payroll. - CNN Story

Can't imagine why they are all running out of Unemployment funding and having to borrow billions. Congress seems to think that the best way to help out is to allow people to stay on unemployment for upwards of 2 years. Want to save some money and help the economy at the same time, forget Health Care reform, lets get down to this unemployment and reform that system. Kick the lazy people out and force people to take a job even if it isn't their dream job.