If Senator Inhofe is Right...

[TMS]

The World reports in its article today entitled "Inhofe lays long list of nation's ills at Obama's feet":

"Inhofe... cited extended unemployment benefits, saying he saw no reason for them in Oklahoma because the state has 'virtually full employment.'"


Funny, then why did employers' quarterly unemployment taxes recently increase by around 700%?  (700%!)

[Hoss]

The World reports in its article today entitled "Inhofe lays long list of nation's ills at Obama's feet":

"Inhofe... cited extended unemployment benefits, saying he saw no reason for them in Oklahoma because the state has 'virtually full employment.'"


Funny, then why did employers' quarterly unemployment taxes recently increase by around 700%?  (700%!)

Inhofe lives in a state alright.  A state of delusion.  Can we please elect this guy out sometime soon?  He was embarassing as our mayor, but at least that was kept local.

[TeeDub]

Funny, then why did employers' quarterly unemployment taxes recently increase by around 700%?  (700%!)

I don't suppose you can cite any basis for this statement?    That seems a little extreme.

[Gaspar]

Glad ours didn't.

[TMS]

I don't suppose you can cite any basis for this statement?    That seems a little extreme.

Not sure where "on the books" it is (though I'll try to find out how this was authorized). But in the meantime, just come take a look at our company's unemployment taxes for the past two quarters compared to any quarter before. When I called to ask about it (and to work out payment plans for such an unexpected increase), I was told that other states have increased their unemployment taxes by as much and that we're just trying to catch up, something like that (a pet peeve of mine as a reason to raise taxes on our local citizens and businesses).

[Gaspar]

What time would you like for us to arrive?

[TMS]

What time would you like for us to arrive?

Preferably when I'm not here

[nathanm]

[sgrizzle]

Not sure where "on the books" it is (though I'll try to find out how this was authorized). But in the meantime, just come take a look at our company's unemployment taxes for the past two quarters compared to any quarter before. When I called to ask about it (and to work out payment plans for such an unexpected increase), I was told that other states have increased their unemployment taxes by as much and that we're just trying to catch up, something like that (a pet peeve of mine as a reason to raise taxes on our local citizens and businesses).

The tax rate is based on things like "unemployment experience factor" and "benefit to wage ratio"

A "new employer" gets taxed at 1% for two years, until they can determine various factors on your business (like how many people you lay off, I presume)

The maximum rate is currently 5.5%

So, if you work for a company who is two years old, did nothing but lay off and you have no benefits, it could've gone up 550%

A more likely cause for increase is the 5.4% in federal unemployment tax which you don't have to pay, if you pay state taxes in a timely manner.

[TeeDub]

Still well short of the awe inspiring 700%.


http://www.tulsaworld.com/news/article.aspx?subjectid=16&articleid=20100803_16_A5_OKLAHO514918&rss_lnk=12

[Teatownclown]

He is right about privatizing the trash service. It's the only change he could ever hang his hat on that is a proven truth. He was able to use this to his political advantage in the years to come of an example how successful he was as a mayor.

Doesn't matter....he may be right he may be wrong but in the end he won't be in any history books.

[TMS]

I do stand corrected. It is "only" roughly 550% of an increase in my company's quarterly tax. (My apologies for my initial calculation of 700%.) Our company is not in the habit of laying off people, nor do we experience many of our former employees filing for unemployment (mainly because we don't lay people off).

A "mere" 550% increase gets us to thinking about how we can deal with such increases. The gentleman I spoke with at the Oklahoma Employment Security Commission told me about this vast increase in employment taxes that other states charge this much, so "we're just catching up to them", something to that effect (read between the lines: a way to increase revenues on the backs of Oklahoma companies). So it sounds pretty hollow when Mr. Mike Seney, the State Chamber's senior vice president of operations, said "Oklahoma is in better shape than other states".  And for Mr. Seney to say that he didn't think the tax increase would affect hiring, that "it is not a major tax for employers," well I can tell you, it's enough of an increase to get us to considering if some people working for us could be reclassified as independent contractors. It may very well enter into the decisions of this company when considering whether to hire more personnel.  It really sounds hollow when Senator Inhofe states that Oklahoma has "virtually full employment" yet we're forced to pay such a dramatic increase.

I believe that increased taxes are counterproductive to the successful operations of business. If our state keeps it up in increasing business fees and taxes even more, we will likely have no choice but to start to do what we've so far been able to avoid--laying off working people.


..just my $0.02 worth

[Conan71]

That would be a cruel irony: A rise in u/e tax rates creating higher unemployment.

[heironymouspasparagus]

Just a little bit curious as to how that is treated any differently than any other business expense?  You get the "deduction" from income, so it is basically a pass-through like a cost of materials.  If you margin stays at 8 to 10% overall annual, then no net impact.  Just another one of those fun little things of being in business, like sudden disruption of critical supplies (Japan earthquake - semiconductors), hurricane coming through and the insurance company telling you there is no coverage, freeze in Florida destroying the tomato crop.  Just another day in paradise!


Plus you do get to add it to the "total compensation" number thrown at employees to show how much they actually get paid above and beyond what shows up on the check.

[Conan71]

Just a little bit curious as to how that is treated any differently than any other business expense?  You get the "deduction" from income, so it is basically a pass-through like a cost of materials.  If you margin stays at 8 to 10% overall annual, then no net impact.  Just another one of those fun little things of being in business, like sudden disruption of critical supplies (Japan earthquake - semiconductors), hurricane coming through and the insurance company telling you there is no coverage, freeze in Florida destroying the tomato crop.  Just another day in paradise!


Plus you do get to add it to the "total compensation" number thrown at employees to show how much they actually get paid above and beyond what shows up on the check.

It's still an additional deduction from your cash flow any way you slice it.  If you have a higher tax, it's an additional business cost and to maintain the 8 to 10% margin in your example, you must adjust your pricing to your customers to maintain that.  Granted, the smaller the workforce, the lower your u/e taxes.  And there is your "gotcha!".  Yes, taxes, if not a disincentive to hire, are certainly a major consideration in planning and managing workforce and payroll.

That said, this is not a gratuitous tax increase.  This is an insurance fund which operates in a similar fashion to a home owners or auto insurance pool.  What happens when a hail storm damages 50% of all the properties in a 10 square mile area?  All those homeowners, even the ones without claims will wind up paying higher premiums to help offset the losses the insurance company paid out.  Generally those with a claim will get a higher percentage hike than those who didn't file a claim.  Pretty much what is going on here with the u/e taxes which technically are not a tax but a premium.

And finally, I don't know of any corporation or small business which boasts about their contribution of payroll or u/e taxes being a part of a compensation package.  Have you really seen that?