Jobs Bill and SUB Plans = Payroll Tax Advantage

With the new Jobs Bill quickly advancing through the Senate, companies may anticipate payroll tax benefits for new employees hired through the end of 2010 through the "Hire Now Tax Cut" component of the bill.

Labor statisticians anticipate an employment rate hovering near 10% through the end of 2010. The government's proposed jobs bill, designed to spur hiring, should lower this rate somewhat while simultaneously allowing companies to recover through rehiring.

Involvement with a program providing tax advantages is always a good business recovery strategy. Yet if a payroll tax advantage is the main draw for companies to hire in this still stagnant economy, mightn't it be sensible for interested business to examine other avenues and adopt additional programs through which payroll tax savings may also be achieved? And achieved in a far more immediate timeframe? The cyclical nature of employment will still require layoffs even as companies rebound, and significant payroll tax advantages are allowable using SUB Plans during these layoffs.

Which, with a hovering unemployment rate, does seem a far more sensible business recovery strategy.

The SUI Tax Hike - Not Really a Bad Thing

The National Association of State Workforce Agencies has just announced increases across 35 states in the amounts of tax money employers will be subject to pay for State Unemployment Insurance (SUI). For many companies, this will be a significant sum of money, as the reported median increase will apparently be 27.5%.

It can be assumed that most companies won’t see this increase as a positive thing. However, these increased taxes will help to replenish many of the States’ Unemployment Insurance funds, so when another recession occurs, there will be fewer states forced to borrow from the Federal government. With the BLS reporting a national unemployment rate of 9.7%, many states’ funds continue to drain – this SUI tax hike is merely a necessity right now.

When else would be a better time for a company to adopt a program which will best utilizes these monies paid to the States’ Unemployment systems? SUI taxes ensure each employee will have access to state-provided funds in the case of a layoff. When a company lays a person off with a severance, use of funds previously paid by the company to the State in the form of SUI taxes ensures the company does not double pay for each individual employee.

Any sensible company that has weathered “The Great Recession,” unscathed or not, will view this tax hike as an opportunity. An opportunity to implement a plan to protect against risks that will present themselves when recession hits again. Those companies who strategize and adopt plans to balance employee and employer needs will be the ones who recover the fastest.