For Now, Good News on Unemployment Taxes
For the first time in five years, Connecticut employers will make it through the month of August without receiving a special unemployment compensation assessment tax bill from the state’s labor department.
In the past, the money collected from those assessments was used to pay down the interest on the nearly $1 billion debt Connecticut took on during the recession from the federal government to shore up the state’s unemployment compensation trust fund.
Connecticut was one of the last three jurisdictions to finally pay back their federal debt.
As a result of finally achieving this goal, employers will not have to pay the extra assessment this year and will see a reduced unemployment tax bill beginning in 2017.
Unfortunately, the relief may only be temporary.
Advocates will kick off 2017 pushing for a new, permanently higher unemployment tax on businesses to prevent future recession-related shortfalls.
Employers should enjoy the momentary unemployment tax relief—because it's unclear how long it will last.
Even before the recession hit, the high level of benefits paid out by the labor department nearly exceeded the collected taxes.
Some argue a balanced approach consisting of large unemployment tax hikes on businesses followed by meager benefit reforms is the best way to return solvency to the unemployment trust fund.
That approach, however, is simply akin to pouring more money into a leaky bucket without first patching all the holes.
CBIA opposes that view, and believes it is time to enact the same benefit reforms that have kept our neighboring states' unemployment trust funds solvent.
Connecticut employers should enjoy the momentary unemployment tax relief—because it's unclear how long it will last.
For more information, contact CBIA’s Eric Gjede (860.244.1931) | @egjede
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