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Ohio Group Proposes Broad Based Tax To Pay Off Unemployment Debt

Tuesday, June 26, 2012 at 4:34 PM

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Zach Schiller, Research Director, Policy Matters Ohio

For three years the state has been borrowing from the federal government to write checks to jobless people, and left-leaning Policy Matter Ohio says businesses are getting hit with more taxes in the meantime.

The fund that pays out benefits to unemployed Ohioans is still broke – it ran out of money three years ago. Ohio has borrowed nearly 1.8 billion dollars from the federal government to write those checks – an action many other states also took.

Governor Kasich’s big budget update passed this month moved $25 million toward paying the interest on that debt.

But a progressive think-tank that follows labor issues says more needs to be done. Zach Schiller at Policy Matters Ohio suggests a broad-based state tax increase to pay off the debt as quickly as possible – because businesses are getting hit with more taxes in the meantime.

“As of right now, employers in Ohio are paying $21 for every employee more this year in federal unemployment tax to pay off the debt,” Schiller says.  “Next year, that will go up to $42. The year after that, it will go up to $63. And so, we are seeing tax increases even if the state of Ohio isn’t enacting them.”

Schiller says these higher taxes paid by businesses are in addition to the interest the state pays on the debt. $70 million was paid in 2011, and an estimated $60 million will be paid this year.

“I think that for a time there was hope that there would be some relief from Washington. However, that doesn’t seem to be in the cards in the moment.”

Schiller notes the state will pay 130 million dollars in interest charges by the end of this year.  And he warns that if the state doesn’t come up with a way to not only pay off the debt and put money back into its unemployment trust fund, the situation will almost certain repeat itself in the future. 

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Economy, Regional Economy/Business - News, Community/Human Interest, Government/Politics

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