Administration pushes for more payroll tax collection
States throughout the country have been crushed by the burden of paying out unemployment insurance from a rapidly shrinking pool of funds or taking on more debt to meet the payments. In response, the Obama Administration detailed a new plan to collect more payroll taxes from companies to help offset the shortage, The Wall Street Journal reports.
As nationwide unemployment grew, more and more individuals turned to unemployment insurance to pay bills. However, the system was overloaded and now a majority of states have gone in the red in part due to lacking funds. The White House's proposal would increase the amount of wages companies will play unemployment taxes on to $15,000 - up from the $7,000 level that has been on the books since 1983, the WSJ details.
The plan, which will be introduced in the 2012 budget on Monday, will likely not take affect until 2014. At that time, the system should align so that the federal government does not take on additional revenue, but would increase the 6.2 percent unemployment insurance tax rate currently paid by employers.
California is a prime example of how unemployment insurance has damaged a state's economy. According to the Los Angeles Times, the state faces a $10.3 billion debt simply from unemployment, which paid out nearly $40 million per day as of November 2010. The paper reports the total debt could hit $16 billion by 2012.
As nationwide unemployment grew, more and more individuals turned to unemployment insurance to pay bills. However, the system was overloaded and now a majority of states have gone in the red in part due to lacking funds. The White House's proposal would increase the amount of wages companies will play unemployment taxes on to $15,000 - up from the $7,000 level that has been on the books since 1983, the WSJ details.
The plan, which will be introduced in the 2012 budget on Monday, will likely not take affect until 2014. At that time, the system should align so that the federal government does not take on additional revenue, but would increase the 6.2 percent unemployment insurance tax rate currently paid by employers.
California is a prime example of how unemployment insurance has damaged a state's economy. According to the Los Angeles Times, the state faces a $10.3 billion debt simply from unemployment, which paid out nearly $40 million per day as of November 2010. The paper reports the total debt could hit $16 billion by 2012.
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