Honolulu

Grim Reality of Unemployment Taxes – Honolulu, Hawaii

Honolulu, Hawaii 2021-04-07 22:24:13 –

In this area, we have made many speculations about the potential of legislation. You will surely know what they are before January 25, the date of Governor Ige’s state speech.

On the other hand, there are also realities that must be dealt with, such as the payment of unemployment allowances. Our unemployment system, As of January 8, 2021 I paid $ 3.4 billion as an unemployment allowance. About half of it was funded by the federal government through various programs such as the $ 300 “plus up”, while Hawaii employers and taxpayers are targeting the other half.

At the end of 2019The unemployment tax paid by Hawaiian employers was on a trust fund of about $ 600 million. It’s gone now, and the state has received a $ 700 million loan from the federal government to maintain the Unemployment Trust Fund. There are some direct consequences.

the first, As I wrote before, Our unemployment tax law is designed to be self-sufficient: if our unemployment trust fund is depleted, the tax rate will increase so that employers can refill pots more quickly. As our fund reached “empty” at the end of last year, corporate unemployment tax is to be raised to the statutory maximum tax rate.Hawaii’s Grassroot Institute calculated it Unemployment tax will triple in 2021 Unless lawmakers change the system. We have heard that the administration will propose legislative measures to limit this effect, and if legislation is proposed, it may be considered and amended by the current legislative assembly.

Under federal law, there are other consequences that our legislature cannot amend.

First, if our state borrows money from Uncle Sam Interest may be charged.. The interest rate of “Title XII Advance” called these borrowings is Expected to reach 2.2777% in 2021.. If we can’t repay $ 700 million, we Hawaii taxpayers could earn about $ 16 million in interest annually.Our State Treasury Director said this debt “It is not legally a national obligation” But the law doesn’t seem to support that conclusion. Federal law prohibits Passing interest costs to employers through the state’s unemployment tax system makes it You have to pay with other funds Tax withholding, etc. Of course, Congress could give up interest because of a pandemic.The· Family’s first coronavirus response law in 2020 Hawaii had no interest on the $ 700 million Uncle Sam at the end of 2020, as it abandoned all interest last year. The bailout under the law has ended and the interest clock has begun to tick again on New Year’s Day. On New Year’s Day, at a rate of about $ 43,700 per day.

Second, federal unemployment insurance tax will be raised for state employees who have not fully repaid their loan by November 10, the second year, when the loan was unpaid at the beginning of the year. This means that if you are unable to repay your $ 700 million federal loan by November 10, 2022, your federal tax increase will begin on January 1, 2023. Additional tax Is 30 basis points for the first $ 7,000 wage to an employee, or about $ 21 per employee in 2023. Taxes will increase in the next few years. By 2024, it will be $ 42 per employee, and will gradually worsen in later years until the debt is repaid. None of these dollars are sent to or reserved for the state. Again, Congress can change these results as needed, but it is not under the control of any state.

Without the epic miracle that the federal government allowed the title XII to move forward (parliamentary delegations say don’t wait for this to happen), the harsh reality of unemployment tax is It is inevitable. In 2020, he paid an astonishing amount of unemployment allowance and borrowed money in the process. Our state government will somehow have to take responsibility for the money, and the 2021 Congress will discuss who’s back bears the burden.

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Grim Reality of Unemployment Taxes
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