Holmquist-Newbry supports tax relief

OLYMPIA - Sen. Janea Holmquist-Newbry, R-Moses Lake, suggests temporarily adjusting unemployment insurance taxes currently required of business owners to help with the budget crunch.

Holmquist-Newbry, along with 11 other senators, supports Senate Bill 5135, a bill aimed at providing employers with temporary relief from unemployment insurance taxes this year.

"We need to do something to protect employers by delivering needed relief now. This legislation will provide nearly $300 million in tax relief for employers and extended benefits for over 70,000 unemployed citizens," she said. "We want to give breaks to individuals who are working hard to not lay people off."

According to the state's employment security department, Washington has a 9.2 percent unemployment rate. Roughly 326,800 people are out of work as of November 2010.

Unemployment insurance taxes pays for these workers and it comes out of business owners' pockets.

Unemployment taxes are collected from business owners in two ways - through the experience-rated tax and the social tax.

Business owners are taxed quarterly for every laid-off employee in their business since 2004, known as an experience-rated tax. The more employees a business owner has laid off in that time, the more experience-rated tax an employer has to pay.

When an employee voluntarily quits or the employer can no longer pay for unemployment benefits, as is the case when a company files for bankruptcy, the social tax portion pays for these former employees.

Every business owner in Washington state contributes to the social tax portion.

For the 2011 social tax portion, an employer who has not laid off any employees pays roughly 1.33 percent of an employees' salary, up to $37,000.

The unemployment social tax for 2011 requires business owners to pay roughly $496 per year per employee.

Senate Bill 5135 would adjust the social portion of the tax to help with recent unemployment spikes.

For example, Senate Bill 5135 would reduce business owners' yearly unemployment social dues from $500 to $350 if the bill was passed.

The bill will benefit employers with the fewest layoffs the most, providing an adjusted tax break of close to $300 million for those employers, according to a letter released by the Holmquist-Newbry offices.

The bill also allows for the continuation of federally-funded extended benefits through this year. Nearly 35,000 former employees in Washington will receive immediate extended benefits with an additional 34,000 employees expected to be eligible for extended benefits later in the year.

"This bill will reduce employers' uncertainty and help them maintain and create the jobs our economy so desperately needs. While this bill only covers 2011, I'll continue to work on a permanent solution," she said. "I'd like to see the temporary component of 5135 be made permanent. Business owners are not just being taxed with unemployment insurance, but with increased workers compensation and business and occupation taxes. They are being barraged in every direction."

Senate Bill 5135 must pass the Legislature and go into effect by Feb. 8 to reflect this year's unemployment insurance tax rates.