State unemployment taxes to rise in 2012
Posted by Bill McDermott on Wed, Dec 21, 2011 @ 12:51 PM
Georgia business owners need to understand that their state unemployment taxes are going to increase in 2012.
Bill McDermott, McDermott Financial Solutions
A $21 per employee per year increase in the state unemployment tax will be implemented in 2012 to help repay a loan that the state of Georgia made with the federal government.
The AJC ran an article in March 2011 that said the state of Georgia had borrowed $672 million from the federal government to pay tens of thousand of unemployed Georgians and the tally rises daily. WSB reporter, Condace Pressley stated on December 15th that the loan has increased to $720 million. Georgia is one of 30 states to borrow money from the federal government for this purpose.
The double-digit unemployment combined with insufficient tax contributions from employers, depleted the trust fund. The state had halted payment into the fund by most employers more than a decade ago. In 1999, the $2 billion trust fund was flush so payments to the fund were suspended.
Georgia business owners will bear the brunt of this tax increase. They can’t pass it on to employees. One business owner was quoted during an interview “it’s just another nail in the coffin for small business owners. I’m trying to figure out how to offset the burden”
House Bill 292 was passed in May 2011 and will postpone a decision to restore the fund down the road. It would also reduce the unemployment tax businesses are supposed to pay beginning in 2012. While taxes will still increase, the amount of the increase would have been more if HR 292 had not been passed.
The Georgia Budget and Policy Institute opposed the bill. “Nobody wants to advocate for raising taxes significantly on employers when the economy is still recovering from recession” said Clare Richie, a senior policy analyst with the non-partisan research group.
If you have questions about how this increase will impact your company, please consult with CPA for details.