What will the illusionist, Andrew Cuomo, do with the Unemployment debt of $3.3 Billion dollars borrowed from the federal government, which he must repay this year, which was forgotten in his budget? As of January 21, 2011, New York State, one of 30 States, borrowed $3,343,758,375.70 from the federal government for paying Unemployment Insurance. Six States, Maryland, New Hampshire, South Dakota, Tennessee and Texas, have repaid their loans in full. Since Cuomo didn't budget for this in his budget, he must be planning to pass it through to NY businesses at an average $478 per worker due from employers.
"The current moratorium on interest on these loans' may cease in December 2010, when a provision of the federal economic stimulus law expires. If this happens, loans not repaid within a year would be subject to interest rates projected at between 4 percent and 5 percent. Furthermore, if states do not repay the loans by November 2011, employers will lose part of a federal tax credit they usually receive."
Federal Unemployment Tax Act also pays half the cost of extended unemployment benefits. For example the FUTA tax rate was at 6.2% through 2009, and was levied only on the first $7,000 earned by each of a company's employees. Under federal law, such tax increases are automatic once the money owed reaches a certain level.
While the illusionist, Andrew Cuomo, was creating distractions, three other States have already have had to raise taxes to begin paying back the money they owe. More than 20 other states likely would have to raise taxes to cover their unemployment insurance debts.
Obama has proposed a moratorium in 2011 and 2012 on state tax increases and on state interest payments on the debt. In 2014, however, the administration proposes to increase the taxable income level for unemployment insurance from $7,000 to $15,000.
Will the illusionist, Andrew Cuomo, fool business by claiming the Unemployment Tax Rate has not increased, when the income upon which it is levied has doubled, thus doubling the tax collected.