by Brad Iverson-Long | Idaho Business Review (click here for original post)
Idaho businesses will save $75 million this year as the state lowers its unemployment insurance tax on business payrolls.
2014 marks the second straight year for a cut in the unemployment tax, as the state trust that pays out unemployment benefits has increased and the number of people collecting benefits has dropped.
The average tax rate businesses will pay this year is 1.9 percent, which applies to the first $35,200 paid to each worker. That tax rate had been at the state maximum level of 3.3 percent from 2010 to 2012 before dropping to 2.75 percent in 2013, according to Bob Fick, spokesman for the Idaho Department of Labor.
Suzi Budge, state director of the National Federation of Independent Business, said the cut is welcome news for small businesses.
“Every little bit helps. Businesses look at bottom-line, ongoing issues and unemployment insurance, workers compensation and base tax levels are fundamental to that,” she said. Budge said that businesses that survived during the recession had to pay higher unemployment insurance taxes, picking up the tab for failed businesses that laid off all their workers.
“Small businesses complain bitterly about that, because those that stay in business get hammered,” she said. “When things are tough, if you’ve managed to stay in business, the rates keep going up and up and up. That’s the sad consequence of the requirement of unemployment insurance.”
The actual tax that businesses pay depends on how much each business has paid into the unemployment trust and how much each business’s former employees have collected in unemployment benefits. Businesses that have paid into the trust and don’t have former workers receiving jobless benefits pay less than 1.9 percent.
Fick said the tax rate fluctuates year-to-year to make sure businesses aren’t overtaxed, but that the state can pay jobless claims during a bad year.
“The rate is intended to generate sufficient revenues so that if we have a payout that equaled the average of the top 3 years in the past 20 years, we’d be able to make it and the fund would be solvent,” Fick said.
The unemployment trust had $390 million at the end of December, far surpassing the $139 million in regular unemployment benefits paid out by the state.