Hurry Up to Unemployment
If, like me, your prospects of facing unemployment in the near future are all too real, this news is unsettling, no matter the assurances that the “move would have no impact on beneficiaries”:
Rising unemployment in Rhode Island is draining the fund that the state maintains to pay unemployment benefits. …
Such a move would have no impact on beneficiaries; payments would continue without interruption and with no change in the way they are calculated, the officials stressed.
But a bailout, in the form of a loan from the federal government to the unemployment insurance trust fund, could trigger a hike in unemployment taxes for employers — on top of the one they already face next year.
Once again, one wonders from where officials think businesses get the extra money that they are taxed. Consider:
Rhode Island’s unemployment insurance tax is paid entirely by about 32,000 employers. Because of a change in the tax formula posted last month, many employers will pay more into the fund next year.
The amount of a worker’s wages to which the unemployment tax applies will jump to $18,000 next year from $14,000 this year, up 28.6 percent. As a result, “The employer’s cost is going to go up,” said Patricia A. Thompson, former president of the Rhode Island Society of Certified Public Accountants.
On average, employers will wind up paying about $625 in tax per employee next year, an increase of about $139, Filippone said.
But exactly how much each employer will pay will depend on various factors, said Thompson, tax partner at Piccerelli Gilstein & Co. LLP, a CPA firm in Providence.
In general, the more layoffs an employer has had, the higher the tax rate — and the more tax the employer will have to pay.
A report issued in October by the nonprofit Tax Foundation said that Rhode Island, Massachusetts, Kentucky, Alaska and Michigan have the least favorable unemployment insurance taxes from an employer’s standpoint — and Rhode Island ranks as the worst.
There’s a reason some employers strive to inspire workers to quit, rather than lay them off. (Although it’s still pretty petty and selfish to do so.) More importantly, even the most scrupulous boss will associate rising expenses with the cost of each employee. $139 isn’t much, compared with workers’ compensation, but in aggregate, it could mean the loss of a raise (or the reduction of a salary) if the boss thinks it prudent to find savings with a handful of employees.
It’s also just one more nut tightening on employers in Rhode Island.