By Paul Trause, Employment Security Commissioner
In the past couple of years, the Employment Security Department didn’t have much good news to share about unemployment taxes – but that’s finally turning around. In 2012, unemployment rates will decline in all 40 rate classes, by an estimated average of 13 percent.
If your business had no layoffs in the past four years – putting you in rate-class 1 – your tax rate will plummet by 71 percent (from 0.49 percent in 2011 to 0.14 percent in 2012). The most you’ll pay on an employee for the entire year is $53, compared to $182 in 2011.
Businesses whose layoff experience puts them at the top end of the rate structure also will enjoy a rate reduction in 2012 – albeit smaller. Even businesses that are moving into higher rate classes due to recent layoffs may experience lower tax rates if they move up only a few rate classes.
Altogether, businesses will pay $207 million less in unemployment taxes in 2012.
The reductions are a result of two factors
You may recall that the state legislature and Governor Gregoire adopted a bill last February that reversed the expected tax increase in 2011 for most businesses. Those changes remain in place and will continue to suppress tax rates in 2012.
In addition, the size of the state’s unemployment benefits fund is factored into the tax-rate calculations. We still have one of the healthiest funds in the nation, and Washington’s employers are reaping the rewards.
During the recession, about three dozen states bankrupted their benefits funds and had to borrow billions of dollars to cover unemployment benefits – some are still borrowing. Although the nation is technically in economic recovery, the states with outstanding loans are facing tax hikes, benefit cuts, and other measures to stabilize their unemployment systems.
Here in Washington, it’s nice to know that’s one thing we don’t have to worry about right now.