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Hawaii To Hike Unemployment Ins Tax

From Nation’s Restaurant News:

Hawaii to raise unemployment insurance tax

By Lisa Jennings

HONOLULU (Oct. 7, 2009) Employers in Hawaii are being warned to prepare for significantly higher unemployment insurance tax rates next year as the state’s benefit fund for the unemployed has rapidly depleted on growing joblessness.

Hawaii officials indicated that the problem is likely to occur in other states where unemployment is high and state benefit funds run out. Some states, like Maryland, already had taken large increases to its unemployment insurance tax rates this year and may take more bumps next year.

Starting in April in Hawaii, the annual taxes paid by employers will increase from the current rate of $90 per employee to as much as $2,040 per worker, depending on the company’s unemployment experience rating, said Darwin Ching, director of the state’s Department of Labor and Industrial Relations.

New employers will pay about $1,500 per employee, he noted, and most employers will be paying a rate of more than $1,000 per worker

Labor officials said Hawaii is a state with generous unemployment benefits, where the jobless receive a maximum of $545 per week for 26 weeks, and an additional 33 weeks of federal-approved benefits.

In 2007, when unemployment in Hawaii was below 3.2 percent, the state’s unemployment insurance trust fund reached an all-time high of $552 million, with employers paying an average of $280 per employee. Later that year, a new law lowered that rate to $90 per employee for 2008 and 2009.

The law, however, had a provision that tax rates would increase automatically if the unemployment trust fund balance dipped below what it deemed an adequate level.

The recession has pushed Hawaii’s unemployment rate to 7.2 percent in August, a rate still lower than the national rate at that time of 9.8 percent. Labor department officials said the state has paid out an average of $31.7 million per month since January, and the trust fund will likely run out by the last quarter of 2010.

Raising the unemployment insurance tax from $90 to $2,040 per worker might well put a crimp on a company hiring new employees.

Which, in turn, might well put a crimp on any recovery as far as unemployment goes.

But who knew that unemployment benefits had to be paid for?

(Thanks to BillK for the heads up.)

This article was posted by Steve on Thursday, October 8th, 2009. Comments are currently closed.

8 Responses to “Hawaii To Hike Unemployment Ins Tax”

  1. BillK says:

    Hawaii is the first of the states to play “screw businesses still in business further.”

    From Natiion’s Restaurant News:

    Hawaii to raise unemployment insurance tax

    By Lisa Jennings

    HONOLULU (Oct. 7, 2009) Employers in Hawaii are being warned to prepare for significantly higher unemployment insurance tax rates next year as the state’s benefit fund for the unemployed has rapidly depleted on growing joblessness.

    Hawaii officials indicated that the problem is likely to occur in other states where unemployment is high and state benefit funds run out. Some states, like Maryland, already had taken large increases to its unemployment insurance tax rates this year and may take more bumps next year.

    Starting in April in Hawaii, the annual taxes paid by employers will increase from the current rate of $90 per employee to as much as $2,040 per worker, depending on the company’s unemployment experience rating, said Darwin Ching, director of the state’s Department of Labor and Industrial Relations.

    New employers will pay about $1,500 per employee, he noted, and most employers will be paying a rate of more than $1,000 per worker.

    Richard Moon, vice president of TS Restaurants based in Lahaina on Maui, said it’s not clear yet how his company, with roughly 1,100 employees in Hawaii, will be impacted.

    But, he said, “We don’t like it.”

    Over the past two years, he said, the multi-concept operator of restaurants such as Duke’s Kauai and Hula Grill Waikiki has not seen any layoffs and turnover has been low, so the company is likely to experience the low end of the expected increase.

    But if something costs you $90 this year and something like $1,090 next year, you’re going to have to look at how to minimize that effect,” he said.

    Labor officials said Hawaii is a state with generous unemployment benefits, where the jobless receive a maximum of $545 per week for 26 weeks, and an additional 33 weeks of federal-approved benefits.

    In 2007, when unemployment in Hawaii was below 3.2 percent, the state’s unemployment insurance trust fund reached an all-time high of $552 million, with employers paying an average of $280 per employee. Later that year, a new law lowered that rate to $90 per employee for 2008 and 2009.

    The law, however, had a provision that tax rates would increase automatically if the unemployment trust fund balance dipped below what it deemed an adequate level.

    http://www.nrn.com/breakingNews.aspx?id=374150 (subscription may be required as article ages)

    Let’s see, last year it cost you $90/year for unemployment insurance, and this year $1,090 just to employ them?

    The wave of layoffs from this is going to be absolutely enormous.

    But hey, at least those laid off will have a “generous” unemployment package; too bad no one will dare create new jobs with the $1,500/head tax Hawaii will assess…

    Read more: http://www.nrn.com/breakingNews.aspx?id=374150&utm_source=MagnetMail&utm_medium=email&utm_term=kucharsk@mac.com&utm_content=NRN-News-NRNam-10-8-09&utm_campaign=Oct.%208,%202009%20-%20Menu%20makers,%20experts%20discuss%20food%20trends#ixzz0TLRsu8Ir

  2. 64dodger says:

    It is interesting to note what groups businesses do not have to pay the unemployment tax in the State of Florida:

    Employment Not Covered
    Some types of work are not covered and some wages paid for services are not subject to unemployment taxes. These exemptions include:

    Employees of a church, or convention or association of churches; or of organizations operated for religious purposes that are operated, supervised, controlled, or principally supported by a church, or convention or association of churches.
    Services performed by aliens in agricultural labor, who have entered the United States pursuant to s. 1184(c) [formerly s. 214(c)] and s. 1101(a)(15)(H) [formerly s. 101(a)(15)(H)] of the Immigration and Nationality Act.
    Services performed by nonresident aliens, who are temporarily present in the United States as non-immigrants under subparagraph (F) or (J) of s. 1101(a)(15) [formerly s. 101(a)(15)] of the Immigration and Nationality Act.
    Services for a school, college, or university by a student enrolled and attending classes there.
    Work on a fishing vessel under ten net tons.
    Services performed as a student nurse in a hospital or nurses’ training school, a medical school intern in a hospital, or a hospital patient.
    Students working for credit in a school program such as CBE or DCT.
    Persons under age 18 delivering or distributing newspapers.
    Service for government by elected officials; members of the legislature and judiciary; those serving on a temporary basis in cases of fire, storm, etc.; or serving in an advisory capacity that ordinarily does not require more than eight hours per week.
    Services performed for a son, daughter, or spouse; or by children under the age of 21 for their father or mother. When the employing unit is a partnership, an exempt relationship must exist to all partners or there is no exemption. This exemption does not apply to corporations.
    Direct sellers who are contracted to sell or solicit consumer goods in homes or places other than a permanent retail establishment, and whose substantial remuneration is directly related to sales.
    Speech, occupational, and physical therapists who are not salaried and working pursuant to a written contract with a home health agency as defined in s. 400.462, Florida Statutes.
    Service performed by an individual for remuneration for a private, for-profit delivery or messenger service, if certain conditions are met.
    Service performed by an inmate of a penal institution (work release programs).

    http://dor.myflorida.com/dor/uc/GT-800058.html

  3. Colonel1961 says:

    Not only do elected politicians need term limits, but so do bureaucrats. These self-serving idiots have no earthly idea how the stupid statutes they enact screw the small (and medium and large) business owners – and ultimately the employees, and remain clueless that small businesses are the engine of America, not some small-minded gubmint functionary…

    Ugh!

    • Rusty Shackleford says:

      Colonel, you’re absolutely correct. It doesn’t affect them directly, or at all in many cases so they never feel the sting of their decisions.

      I think there has to be a place somewhere where DMV workers, when they die, don’t get to the Pearly Gates right away…they have to take a number, sit next to someone with the flu or out-of-control kids, or both…then get skipped over because the “take-a-number” system is broken…then when they finally get to talk to St Pete, find they don’t have the right form, or they filled it out wrong, etc.

      Then they get kicked out of heaven because they lost their temper.

      That would be justice.

  4. proreason says:

    Makes sense.

    People out of work need money.

    So take more money from people who are working through taxing the businesses that pay them.

    So more people will become unemployed.

    Which will allow the cycle to begin again.

    All resulting it a larger and more powerful bureaucracy.

    See how it works.

    Now, families, churches, and other charitable organizations also take care of people out of work….as they always have done. But that doesn’t increase the size of the bureaucracy.

    So we can’t have that.

  5. catie says:

    I miss the beauty, the kindness of most people but I don’t miss the craziness that is Hawaii. Mahalo for the beautiful picture of Diamond Head.

  6. Rusty Shackleford says:

    Here’s the thing.

    We live in a world where there are people who can produce some incredible motion pictures. Many of them, on occasion, have had to do with sociopolitical subjects such as the Nazi’s, the East Germans post WWII, the USSR, China, etc etc. And they often do a stunning capture of the bureaucracy that suppresses people and they paint the picture so well, that it truly can grab your emotions, if you are so inclined.

    I can see it on the set, “I want you to think as if you are actually the proletariat of the state here and a bureaucrat of some note…and you are preventing the main character from achieving his goal…on the basis that you, the representative of your oppressive leaders, do not want him to reach it and you use all the tools at your disposal to ruin his day….OK You got it? Make it as REAL as possible. Great….Places everyone, this is a take….roll film…..action”

    And yet…these same artists cannot, WILL not, for one minute connect the dots between the movie they are creating and how that proletariat actually got that way in the real world. The disconnect between the left and right halves of the brain is complete. Yet it astounds me nonetheless.

    It’s like showing a kid a picture of a fire and it’s not hot, of course. But he sees the real fire, sticks his hand in it and cries out in pain; The look of astonished betrayal on his face.

    There used to be a cartoon we had in the military about a tire swing. It was about six frames and went through drawings of “How supply ordered it”, “How contracting installed it” “How engineering designed it” and the last one was “what the customer wanted” with a tire on a rope tied to a tree limb. I often think another two frames should be added; That being: “How the liberal envisioned it” and “what we really got”.

    Utopia…a mythical place where unicorns fly and everything tastes like broccoli and vinegar (what? You were expecting cotton candy? That stuff will lead to bad health…and crime, no less.)

    Well, sorry folks. Another diatribe gone on too long. I need to get a pet fish or something to talk to.

  7. canary says:

    Poor Obama, many of his classmates from his private school had swimming pools, and he had to swim on the beaches with the “brown” native children (his description). He also sought muslim friends growing up on Hawaii.


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