Weatherford Democrat

Business

December 14, 2009

State unemployment tax on businesses to triple

AUSTIN (AP) — Nearly two-thirds of Texas businesses will see the unemployment taxes they pay per employee per year nearly triple from $23.40 to $64.80 under rates announced Tuesday by the Texas Workforce Commission.

The minimum tax is paid by nearly 255,000 employers, or 67 percent of those who have been in business for at least a year, according to the commission.

The taxes feed the state’s unemployment trust fund, which has been depleted by a high number of jobless claims. The state already has borrowed about $1 billion interest-free from the federal government to help keep the fund afloat.

Just counting state-paid unemployment benefits — not federally funded extensions — Texas is paying $68.6 million a week in unemployment benefits compared with $33.6 million a year ago.

About 700,000 Texans currently are receiving unemployment benefits, including those funded by the state and federal government.

The tax rate is being increased to repay federal loans and ensure the fund has enough money to pay claims in the coming year.

The rate is based on $9,000 in taxable wages. The minimum rate is going from 0.26 percent to 0.72 percent.

The maximum rate — generally paid by companies if they have had more employees who were laid off and got benefits — is going from 6.26 percent to 8.6 percent, or from $563.40 per employee to $774.

The commission last month said total unemployment tax collections were expected to rise from $1.09 billion this year to $2.3 billion next year, $2.68 billion in 2011 and $2.72 billion in 2012. The immediate increase would have been higher, but the commission said it would spread the deficit assessment over several years.

GOP Gov. Rick Perry earlier this year stood against the state taking $555 million in additional federal stimulus money for unemployment benefits because taking it would have required expanding jobless benefits.

Critics have said taking the money would have cut the amount employers must now pay, but Perry and backers of his move, including the Texas Association of Business, have said rejecting the money was proper because the costs associated with expanded coverage would have remained after the stimulus funds were gone.

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