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State’s businesses should not have to cover debt burden

Feather Publishing
1/24/2014
 

Feather Publishing received an unexpected bill in the mail this week. And we are certain we weren’t alone.

Many California business owners were startled this month when they learned how much more they owed the federal government for unemployment tax (FUTA) for 2013.

Since 2011, California employers have been paying higher taxes because the state has not repaid money it borrowed from the federal government. The state needed the government loan to pay its unemployment insurance benefits. The amount of that additional tax has increased each year.

In Feather Publishing’s case, we have to write the feds an additional check for several thousand dollars by the end of January.

One could argue businesses should have anticipated and budgeted for this. But we suspect many employers didn’t. The first two years of this assessment were more manageable and, for a variety of obvious reasons, more palatable. No longer is that the case.

Equally disturbing is why businesses, large and small, have to continue to shoulder a financial burden that was created by our lawmakers in Sacramento some three years ago. The state has not repaid the money it borrowed from the federal government to pay its unemployment benefits and it appears it won’t anytime soon.

Our governor and state lawmakers are already proposing plans to spend the additional tax revenue windfall expected this year. We won’t argue the need to carefully consider spending more on schools and health care. But the state should pay its bills first.

The state absolutely has to bring some financial relief to small businesses — or soon there won’t be any businesses left to tax. Many are just hanging on by a thread.

We agree with a statement made by the California Chamber of Commerce that the state Legislature has made a series of public policy choices that has led to a high tax burden, excessive power costs and expensive commercial property.

Any fix for the unemployment insurance trust fund must address the fund’s insolvency. It has to ensure further debt is not incurred going forward and consider all options to streamline the system. Any solutions must include policy changes that will improve the state’s business climate, spur investments and create jobs.

Far too many state and federal lawmakers seem to think small businesses have deep pockets. They have this absurd notion that we will always be able to find ways to absorb the taxes they pass along to compensate for their reckless spending habits.

Today, nothing could be further from the truth.


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