Economy

Hefty Idaho unemployment tax squeezes businesses

Brandon Wright, owner of Ultra Clean Fire, Floods and Carpets in Meridian, expects to pay $10,000 more in unemployment taxes this year for 12 employees.

That money will have to be made up somehow, he said - probably from increased service charges. He already has cut 10 positions from his staff and has stopped offering some services that weren't profitable.

"The margins in our business are not that high to begin with, so as a business owner, I have to recoup those costs somewhere, which forces me to increase my cost to my customers," Wright said. "Without passing on the cost to someone, our business will cease to exist."

Responding to rising jobless claims, Idaho's unemployment tax rate has more than doubled this year. The 2010 increase comes after a 70 percent increase a year ago.

The tax is paid only by employers, not workers. The standard rate employers paid last year was 1.56 percent on the first $33,200 of an employee's wages - an average of $518 per worker, up from $296 in 2008. This year, the standard rate has risen to 3.36 percent on the first $33,300 - more than $1,100 per worker. The standard rate is applied to employers in business less than 18 months. An employer's actual rates then rise or fall based on unemployment insurance claims made by workers the employer lays off.

Officials say the tax will remain that high at least through 2011 and maybe 2012 as more people go back to work and the state repays federal money it has had to borrow to pay benefits.

Read the complete story at idahostatesman.com

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