Killing the Weak as Recovery Strategy
Reading about Rhode Island’s effort to return its unemployment fund to solvency in yesterday’s Providence Journal, I got the impression of a system so counterproductive that only government officials could conceive of it (and getting worse):
The employers’ payments are determined by the number of former workers qualifying for payments; those paying the highest taxes now will pay even more.
Employers will now be split into two categories and pay unemployment insurance taxes based on two taxable wage bases. Most employers will pay a tax calculated with a wage base of $19,600 — a 3-percent increase over last year’s base of $19,000.
But those employers whose taxes are calculated at the 9.79-percent rate because they have the highest number receiving benefits will have a wage base of $21,1000. That’s intended to offset the large drain these employers exert on the unemployment fund…
It’s funny: When children are poor, we don’t tax their parents more because their kids are a drain on the system, yet when the economy turns sour, we tax the hardest-hit businesses most. That’ll teach them! No doubt, as they begin to recover to profitability, they’ll be that much more reluctant to hire new employees.
And call me cynical, but splitting the “wage base” looks like an elaborate way to avoid having the high-end tax break the 10% barrier. Taken together, these two points illustrate well how the government in Rhode Island perceives businesses — not as partners, allies, or patrons, but as a “them” that has money to take.