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Last updated on Wednesday, October 28, 2009
(INDIANAPOLIS, IN) - Senate Republicans want to delay January’s scheduled increases in the payroll taxes businesses pay into the state’s unemployment insurance fund.
Legislators in both parties hammered out a deal just six months ago to raise taxes to keep the fund from going broke.
Now Senate GOP Leaders argue with businesses still struggling to emerge from the recession, the start of three-year phase-in of the new rates should be pushed back a year.
The Indiana Chamber of Commerce had fought furiously against the deal when it was made, predicting the hikes would harm businesses, and contending there should have been accompanying limits on benefits.
The changes would actually lower tax rates on smaller businesses whose employees submit few claims.
The brunt of the increases would be borne by larger firms.
Senate Tax and Fiscal Policy Chairman Brandt Hershman (R-Wheatfield) says more than 41,000 firms would see their taxes go up.
Hershman says he fears businesses would launch a fresh round of layoffs if those tax hikes hit while the economy is still finding its feet.
He argues delaying the hikes would encourage businesses to use the money to increase hiring instead.
Indiana is one of 40 states receiving interest-free loans from the federal government to keep unemployment funds afloat.
The government is scheduled to begin charging interest next year, but Hershman says the Obama Administration is likely to reconsider that plan.
Hershman estimates Indiana will borrow $1.7 billion from the government to keep the fund solvent.
Governor Daniels issued a statement saying he'd sign a bill delaying the increase if it reaches him.
He says no other state has attempted to address the fund shortfall.
Other aspects of the package, including tightened scrutiny of claims from workers fired for misconduct, have already taken effect.
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