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Tuesday, April 13, 2010

 

Arizona Unemployment Tax Could Increase

Many business groups are asking employers to pay more for Arizona unemployment benefits.

Along with several other states, Arizona began borrowing money in March, when the state's trust fund that pays for the benefits was used up. That fund is provided by taxes that employers pay.

There are currently about 170,000 Arizona residents who collect unemployment benefits, which is an increase from the 25,000 residents who did so during December 2008, according to the Arizona Department of Economic Security.

As of March, 33 states had borrowed a total of $38.2 billion from the federal government to help pay for unemployment benefits, according to the National Conference of State Legislatures.

The Arizona House of Representatives Commerce Committee is now looking at new legislation that would require employers to pay a $42 per-employee assessment in 2011 and 2012. That fee would be above the state tax employers already owe for unemployment benefits.

According to The Associated Press, the assessment fee would help pay for future borrowing from the federal government and save employers money over time. At the same time, automatic adjustments from the program's increasing costs will raise the current unemployment tax from $146 per employee per year to $158 in 2011 and $161 in 2012.

Unfortunately, those increases won't provide enough money to begin repaying the federal government in time to avoid a large tax increase that could be imposed in 2012. Other options being considered include a permanent tax increase and earlier implementation of the assessment.

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