Idaho businesses can expect more than 70 percent tax increase next year

Idaho businesses can expect more than 70 percent tax increase next year

by
IFF
October 26, 2009
IFF
October 26, 2009

Idaho businesses will see at least a 70 percent percent increase in their unemployment insurance taxes next year. That's on top of the 70 percent increase businesses are coping with this year.

Though the rate for 2010 has yet to be determined, Bob Fick, spokesman for the Idaho Department of Labor said, “The rate will go up and go up more than this year.” Fick wasn’t ready to comment an exact rate for 2010 but said the department is working on it and would know by December. As high unemployment continues to plague every county of the state, business owners are already finding themselves paying a 70 percent increase over last year in all unemployment insurance tax rates. Nearly 30 percent of the counties in Idaho showed double digit unemployment rates for September 2009.

Taxes paid to the unemployment trust fund by Idaho businesses were half of the benefit payments of $210 million that went out in 2008. Though the spike seems dramatic, we haven’t reached the highs of 2006 when the rate climbed to 1.10 percent. Businesses are struggling nonetheless.

“Any increase hurts us. That is money that we could be using to give our employees higher wages, or using to invest and expand our business, and as a result employing more people,” Kim Wilson, owner of ABUGames in Boise, said.

Owner of Petals & Stems, Debbie Brown of Boise, said she expects the impact to be significant. “I’m afraid when the rate comes into effect, fewer employees can be hired. With fewer employees, I don’t know how I can stay in business. Small business make a community thrive and many of my customers have expressed their gratitude that I’m still here and they’re afraid that I won’t be here the next time they come.” Brown also said that 10 florists had closed down recently, one of them who had been in business for 50 years.

“This definitely affects the bottom line,” said Jen Fraser, co-owner of the 50-year-old restaurant Stagecoach Inn in Garden City. “It’s one of those things we have to pay for; kind of a permanent hit and not something easily mitigated for other things. It makes us watch things more as far as costs go.”

The Legislature changed the formula for calculating the unemployment insurance tax rates in 2005, reducing the balance for the trust fund from $400 million to $200 million, which gave Idaho employers record low rates after the business community requested a smaller Unemployment Insurance Trust Fund. However, as the economy declines, the Unemployment Insurance Trust Fund is depleted more rapidly than revenues coming in, which means higher tax rates during downturns.

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