Kansas City Star Announces: Business tax proposal meets resistance

Date: 03.17.2011 | By: Vomer

Here is an article from the Kansas City Star, written by Diane Stafford, about the recent business tax proposal.

Business tax proposal meets resistance

A White House proposal to shore up state funds for jobless benefits is getting a cool reception from business groups, including the state chambers of commerce in Missouri and Kansas.

The proposal would raise costs for businesses in 2014 by increasing the wage base for jobless insurance taxes.

It also would give the states a two-year penalty-free period to repay money they borrowed from the federal government when their state unemployment funds ran dry.

At least 31 states, including Missouri and Kansas, have borrowed money to continue paying jobless benefits. Missouri’s federal debt is slightly more than $789 million. Kansas owes $100.7 million.

The White House proposal would raise the taxable payroll threshold to $15,000 per employee, up from $7,000.

The White House plan somewhat echoes a proposal last year from the Government Accounting Office, the auditing agency for Congress, which said raising the taxable wage base was a good option to shore up jobless funds.

Many states, in an attempt maintain solvent funds, have raised their state taxable wage bases, some three to five times the federal base. The current federal tax rate is 6.2 percent on $7,000, the wage base in effect since 1983.

Missouri’s current taxable base is $13,000, adjustable by $500 on an annual basis. A spokesman for the Missouri Chamber of Commerce and Industry said the chamber is against any tax increase on employers as the nation tries to escape the economic downturn.

The Kansas base is set at $8,000. A spokesman for the Kansas Chamber said that group would reject the White House proposal in favor of a state bill that would raise the taxable base incrementally to $11,000 over the next three years.

Nationally, states have borrowed $42 billion from the federal government to be able to pay unemployment benefits after their state funds ran dry.

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