UCC  Newsletter

How much will New Jersey employers pay in July 2010?

There is less than one month until the NJ Unemployment Tax Rate Notices are issued and there is still no definitive word on what employers will be paying as of July 1, 2010. But we can guess! Despite the fact that the NJ unemployment trust fund is bankrupt it appears that with the help of some creative accounting the state rate chart will only move over one place. This is the same thing that happened last year.

What is the rate chart and why is it important to you? Well, with a relatively high taxable wage base of $29,700 any increase in the rate chart can be costly. The anticipated increase, depending upon what your rate is now, will be between $30 and $270 per year, or 0.1% and 0.9%.

The really frightening truth is that 80% of all state funds are bankrupt, including the unemployment trust fund of New Jersey. When the NJ fund is bankrupt the tax rate increases should range from 0.9% to 2.8% which becomes $267 to $831 annually. The top rate would be $2,287 per employee per year as opposed to the current max of $1,604 for state unemployment tax.

The clients of UCC, Inc. will receive a letter comparing their current NJ unemployment tax rate with the anticipated increase. Naturally, the actual tax rate notice, due to arrive in July should be somewhat different as it will include this past year’s experience. These notices will be analyzed for favorable voluntary payments.

Although the Department of Labor has been dispensing unemployment benefits at a frenetic pace, there are some proposals to curtail this practice. The contemporary theory about spending ourselves out of a recession is being challenged by the mounting deficits, tax increases and business failures. It remains to be seen whether the maximum NJ unemployment benefit of $600 will be reduced, if the waiting week will be restored and whether the administrative decisions to pay benefits will once again be understandable. I would settle for the last option.