Obama Wants To Double Unemployment Taxes

The expansion of unemployment benefits has amassed billions of dollars for the states which don’t have the revenues to pay for those benefits. Now states are being forced to look at raising taxes to pay for this new debt – indeed in many states the law requires the tax increases once the unemployment debt reaches a certain level – but Obama wants to put off the tax increases until 2014…at which point he wants to double them.

WASHINGTON (AP) — The Obama administration is proposing short-term relief to states saddled with unemployment insurance debt, coupled with a delayed increase in the income level used to tax employers for the aid to the jobless.

The administration plans to include the proposal in its budget plan next week. The plan was described late Monday by a person familiar with the discussions on the condition of anonymity because the budget plan is still being completed.

Rising unemployment has placed such a burden on states that 30 of them owe the federal government $42 billion in money borrowed to meet their unemployment insurance obligations. Three states already have had to raise taxes to begin paying back the money they owe. More than 20 other states likely would have to raise taxes to cover their unemployment insurance debts. Under federal law, such tax increases are automatic once the money owed reaches a certain level.

Under the proposal, the administration would impose a moratorium in 2011 and 2012 on state tax increases and on state interest payments on the debt.

In 2014, however, the administration proposes to increase the taxable income level for unemployment insurance from $7,000 to $15,000.

Under the proposal, the federal unemployment insurance rate would be adjusted so that the new higher income level would not result in a federal tax increase, the person familiar with the plan said.

States, however, could retain their current rates, meaning employers could face higher unemployment insurance taxes beginning in 2014

In other words, the expansion of unemployment benefits has created a huge amount of debt for the states. Obama wants to pay that debt off later, with big tax increases on employers, rather than now.

All of which illustrates the lunacy of expanding unemployment benefits in order to help rescue the economy. Democrats talk of these expanded benefits as though they were helping the unemployed, but in reality the benefits are paid for by employers. You know, the people we want to be hiring.

In order to expand benefits payments to the unemployed (who we want to be working), we’ve created a huge amount of debt to be paid off by taxes on employers (who we want to be hiring the unemployed).

Put another way, we’re making it easier to be unemployed and harder to hire.

Hope for change.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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