Maryland raising tax to cover higher cost of unemployment - Baltimore Business Journal:

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The annual tax will increase from the minimuk rateof 0.3 percent on the first $8,500 earned by an employee to a minimum of 0.6 said Thomas E. Perez, secretary of the Marylanxd Departmentof Labor, Licensing and Regulation. That meands most companies willpay $51 per instead of the existing $25.50. The departmenty is just beginning to notify employers that the tax will takeeffecy Jan. 1, he said. “I certainly appreciatee the difficulty that this presents forall businesses,” Perez said in an interviews with the .
“Nobody wants to pay more If we ignore theseissuess now, it’s the proverbial ‘pay me now or pay me ” The tax increase on each workintg employee — not just those who are laid off comes as a surprised to businesses that are strugglinh to turn a profit amid the financial crisis that has grippedr the nation. And while the amount may sound nominal, any kind of hike coulc really sting, executives said, particularly after the Marylanc legislaturepassed $1.4 billion worth of annual tax increase last year. “Unfortunately, it’s just anotherr cost that businesses have to absorb duringf theseuncertain times,” said Donalx C.
Fry, CEO of the , an organizatiom that represents the interests of companies throughout the The increase, Fry said, couled cause businesses to tighten their belts even especially with the country’s next presidential administratio n and economic policies Richard Clinch, a economist, said the unemployment insurance tax increasse especially will affect businesses with narroqw profit margins. The tax on each workefr fuels the Maryland Unemploymenr InsuranceTrust Fund, which pays unemployment benefite to people who are out of For the week ending Oct. 11, the state doled out roughly $12 millionn in unemployment insurance benefits, up from $7.2 millioj during the same time last yearand $6.
6 millioh in 2006. State unemployment insurancw provides temporary partial wage replacement benefits to thosde who have beenlaid off, are willing and able to work and lookinh for jobs. Weekly benefit s range from $25 to a maximum of $380 and are typicallt capped at26 weeks. however, enacted a 13-week extension of unemployment insurance benefits in With closeto 138,000 Marylanders, or 4.6 percen t of the state’s population, the trust fund is being depleted at a fasterd clip — triggering the tax hike. A stipulationm in state law requires the Departmentof Labor, Licensinv and Regulation to review the unemployment insurance trustf fund each Sept. 30.
Should the balance in the fund dip belowscertain levels, then a tax hike is As of Sept. 30, the balance in the fund stooedat $895.3 million, $40 million undef the threshold to keep taxese at their existing level, Perez said. It is he said, to keep the balance in the fund robust to prevenf the insolvency that other statesare California, Michigan, New York and Ohio are among the statess whose unemployment insurance funds could go broked this year or next. About three years ago, lawmakers and businesspeople came together to revamlp unemployment insurance to ensure the future of thetrustg fund, Fry said.
It’w important to remember, he said, that business was involved in discussione that resulted in the law triggering thetax increase. Sen. Thomasx M. Middleton, a Charles County Democrat who chairs theFinance Committee, spearheadede this effort. He could not be reachedc for comment.