Businesses Face 37% Unemployment Tax Rise

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The New York Sun

ALBANY – New York businesses will be hit with a 37% increase in a federal assessment on unemployment insurance by January 31, the latest tax hike blamed on the September 11 terrorist attacks.


The result will be a one-year, $21 increase per employee to the $56 cost employers now pay for government-mandated unemployment insurance.


The state borrowed $400 million from the federal unemployment insurance system two years ago to stave off an increase as unemployment ranks rose after the September 11, 2001, terrorist attacks. But, under the state-federal system, employers pay back any borrowing because they fund unemployment insurance, said a Pataki administration spokesman, Rob Lillpopp.


The increase was first reported by The Buffalo News, in a story that said the state failed to pay back the federal loan. But Mr. Lillpopp denied the increase is the result of defaulting.


“That is typical. They default, we pay,” said Kurt Amico, partner and co-owner of MidCity Office Equipment in Buffalo. “If I default on a loan, I still have to pay it,” he told The Buffalo News.


“It’s gotten unbelievable to do business in this state,” said Steve Glamuzina, owner of Georgetown Square Wine and Liquors in Amherst, which has eight employees. “Every time you turn around, there’s another tax that’s coming along. Private business is not an endless well, and you just cannot continue to keep taxing and taxing,” Mr. Glamuzina.


The Pataki administration consulted with members of the state’s business community, who agreed on the assessment as the least costly option, said Mr. Lillpopp of the state Labor Department.


While the cost is another drag on businesses’ bottom line, it’s not unexpected, said the state Business Council’s Robert Ward. He said it also shouldn’t be a huge burden on businesses, but acknowledged the increase isn’t going away soon because the state is creating jobs slower than the nation.


“The $21-per-employee increase in New York state’s unemployment-insurance tax, while unavoidable, is an additional cost burden on employers,” said the president of the Business Council, Daniel Walsh. “The solution to this problem, as with so many others, is to keep the jobs we have and bring more jobs to New York. That will mean more dollars flowing into the (unemployment insurance) fund, and fewer unemployed workers collecting benefits. We need more jobs. We don’t need more taxes.”


“The [September 11, 2001] disaster put a greater stress on the [unemployment insurance] system than could ever have been anticipated,” Mr. Lillpopp said. “The Department of Labor has drafted legislation to enhance the current system’s ability to withstand unforeseen events.”


Mr. Lillpopp said the assessment is required if the state doesn’t repay the federal fund by Wednesday, a date set by the federal government.


Large companies and some trade groups, however, were aware of the increase. Smaller companies and accountants should get notices soon.


Last month, the state Labor Department reported that statewide unemployment dropped to 5.5% in September, the lowest rate since the September 11, 2001, terrorist attacks.


The national jobless rate is 5.4%. Joblessness in New York was 5.6% in August 2004 and 6.4% in September 2003. New York City’s rate was 6.9% in September, 0.2 percentage points higher than in August.


The New York Sun

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