Tuesday, February 3, 2009

Michigan may have to increase its unemployment insurance tax on businesses

According to Crains Detroit the state of Michigan will likely face higher taxes on businesses in order to compensate for the bulging borrowings to pay for unemployment insurance claims.
State's UI debt may mean higher taxes
Business groups, state look for fed help

LANSING - Michigan employers will face higher federal unemployment taxes next year if the state doesn't repay the federal government loans used to pay unemployment insurance benefits.

The outstanding loans have ballooned to more than $1 billion, and are likely to go higher, as state unemployment continues to climb.

The higher taxes would be used to help repay the loans. Some employers already were assessed higher taxes by the state last month to help defray the interest.

If Michigan or any other state has an outstanding loan balance for two consecutive years, there is an automatic increase in the federal unemployment tax that all employers pay. The tax would continue to increase each year the loans aren't repaid.

The situation has some business interests and state officials looking to Washington for help.

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