What do you get when your state is fiscally irresponsible? You pay more for their bad decisions.
Apparently, 31 states are planning to borrow almost $50 billion from the Federal government to pay for unemployment insurance benefits. To pay for this, they plan to increase state and federal payroll taxes. This increase in payroll taxes will tend to reduce future employment plans and may result in more layoffs.
41 states already increased their 2010 payroll taxes by about 34%.
In 2008-09 states collected about $30 billion and paid out about $80 billion in benefits.
I like the statement in the article that eludes to Washington DC charging employers in states that aren't repaying the Federal loans - as if the employers-employees had anything to do with causing the problem or the state's spending.
Bottom line: This will be an additional burden on states and businesses trying to come out of a recession.
Source: WSJ - 11-20/21-2010, A5
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