The Federal government giveth, the states taketh away.
The same week businesses learned they could receive some tax breaks from the Federal government, a number of cash strapped governments announced sizable hikes in unemployment rates.
For example, some companies in Colorado could see their premiums for the unemployment insurance fund more than quadruple next year, according to the Denver Post. The paper reported that notices about the increases have gone out to businesses over the past two weeks.
Like many states, Colorado's unemployment insurance fund is tapped out due to record numbers of unemployment claims. According to The Post, The Colorado Unemployment Insurance Trust Fund had to borrow $368.5 million from the US government.
The paper noted that at least 40 other states also are borrowing from the federal government to cover their fund deficits.
As is usually the case, the businesses that have histories of layoffs will feel the most pain. The only problem is that many companies with higher claims histories already are near the state's maximum rate of 5.4 percent of the first $10,000 a worker earns, according to the report.
So, businesses with low claims histories also will be required to pay higher rates to make up the deficit.
Colorado is not alone.
Montana employers will see an increase in unemployment insurance rates for the second straight year, according to the Associated Press. Companies will be required to shell out an average of 2.32 percent of wages in 2011, compared to 1.92 percent in 2010.
The AP points out that an employer's contribution rate is based on their history of unemployment claims.
Meanwhile, The Texas Workforce Commission says the standard minimum tax to employers will rise by 8.3 percent, to about $70.20 per employee in 2011.
Nevada this week also raised its insurance tax for 2011, from 1.33 percent of wages to 2 percent, according to Nevadaappeal.com. According to the report, the average tax businesses pay the state for each worker will rise by $180, from $353 a year to $532. It noted that those businesses will also see their federal tax rise by $21 to $77 a year. Add it all up and the total average cost to business will increase 33 percent.
Last month, Maine announced that the unemployment insurance cost to employers will go from about $93 per worker per year to about $103 per worker per year. Overall, it will cost Maine employers about $14.5 million more in tax payments.
In Massachusetts, businesses are facing a 40 percent increase in 2011, the highest rate increase allowed under state law, according to the Boston Business Journal, citing the Associated Industries of Massachusetts.
Little wonder companies are not hiring much these days.