Taxes on La. businesses will go up if Congress does not replenish unemployment fund, Gov. Edwards warns
Unemployment payouts would also be reduced
BATON ROUGE, La. (WAFB) - Taxes on businesses will automatically increase and unemployment payouts will automatically decrease unless Congress takes action, Gov. John Bel Edwards warned in a letter to Louisiana’s delegation Tuesday.
If Louisiana cannot replenish some of the money in its unemployment trust fund by September, the amount of a company’s taxable wages would increase from $7,000 to $8,500 and the maximum weekly unemployment benefit a jobless person can receive would drop by $26. State law automatically triggers these changes when the fund’s balance falls below $750 million.
Roughly $350 million is left in the account, as the state enters its sixth month in the fight against the coronavirus and ensuing recession. If the trust fund balance falls below $100 million, the state would impose an additional surtax on employers of up to 30% on taxable payroll.
“Over time, when you pay out more benefits as we obviously have been doing throughout the course of this (pandemic), you run down the balance of that trust fund,” Edwards said at his press conference on Tuesday. “Nobody believes this is a good time for a tax increase or a surcharge to be passed to employers.”
Businesses pay unemployment taxes on their employees’ behalf. In Louisiana, a jobless person can draw up to $247 each week from the account while they seek employment.
Congress offered an additional $600 each week to anyone collecting unemployment during the pandemic. That provision expires at the end of July.
Louisiana’s unemployment trust fund was worth more than $1 billion in Sept. 2019, then ranked as the nation’s 17th strongest savings account for unemployment insurance. The state could borrow the funds from the federal government to replenish the pot, but that money would be paid back over time, also by automatically increasing taxes on businesses.
Edwards is asking Congress to send the state some money before the tax increases kick in, or to make those loans forgivable.
“Eventually, I have to pay my rent. I have to pay my insurance. I have to pay my employees,” Goodwood Hardware owner Trent Boyd said, lamenting a potential tax increase that he says would be passed on to the consumer. “Somebody has got to help so this doesn’t just get put on the employers’ backs like, ‘Hey, you’re supposed to swallow this again.’”
Lawmakers in Washington, D.C. are currently negotiating the next Coronavirus relief bill that could include some money for states to solve this problem.
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