Unemployment Insurance Tax Hike Expected Next Year

CONTACT: Ellen Valentino (410) 693-2226 or Jason Brewer (202) 406-4435

Expansion of benefits, not just rising unemployment, to blame for trust fund drain  

ANNAPOLIS, Sept. 29, 2009 –All or part of the following may be attributed to Ellen Valentino, state director of National Federation of Independent Business/Maryland, regarding the expected increase in unemployment insurance payroll taxes next year.  

News that Maryland’s unemployment insurance trust fund is drained, triggering a massive hike in unemployment insurance tax rates, is terrible news for Maryland’s small business community. A payroll tax increase of this magnitude will be devastating for those employers already struggling to make payroll and keep their doors open.  

Small business employs roughly 53 percent of the state’s private labor force, with more than 109,000 small businesses employing 1.1 million Maryland workers—meaning our state’s smallest job providers will pay the biggest price when this tax increase is triggered. 

While the economic slowdown is largely responsible for the fund’s strain, continual expansion of unemployment benefits only exacerbates the problem. As recently as this spring, lawmakers refused to listen to the small business community when they created a new benefit for part-time workers, despite numbers clearly showing the trust fund was already under tremendous strain. 

Actions that increase the fund’s long-term liabilities will only mean higher taxes on job creation and a slower economic recovery for those who are desperate to get off unemployment and get back into the workforce.