State cuts unemployment insurance tax
On Wednesday, Gov. John Lynch announced the cut in the unemployment insurance tax paid by 40,000 New Hampshire employers.
The rate will be cut a half percent this month and another half percent on Jan. 1. Each half-percentage reduction equals about $70.
'This is good news for New Hampshire businesses, and I am very pleased that we are able to provide this tax cut for employers across the state. We made a promise to businesses that we would cut this tax once the unemployment trust regained its strength, and we are keeping that promise,' Lynch said in a statement. 'The recent recession marked the most difficult economic time the state has faced since the Great Depression.'
The state's unemployment trust fund dropped significantly during the recession, which plagued the state and the nation. The state's unemployment increased significantly beginning six years ago, and although it has decreased, it has not returned to the level before the financial industry meltdown that led to the recession.
The number of unemployment claims put the fund at risk of insolvency.
As allowed under state law, a half-percent surcharge was added to the tax in 2009 and again in 2010. The Department of Employment Security Commission has the power under state law to add or remove the surcharge based on the trust fund's balance.
'The New Hampshire business community supported these surcharges because they recognized the importance of keeping the trust fund viable,' said Department of Employment Security Commissioner George Copadis. 'Our management has strengthened the fund and is allowing us to take these important steps for our businesses.'
The average New Hampshire employer pays 3.5 percent in unemployment compensation tax on the first $14,000 in wages per employee or about $490 per employee.
The surcharge was imposed when the fund dropped below the $150 million level. The fund now holds about $170 million to $175 million so the surcharge is being rescinded.
Legislative leaders applauded the news, 'Our Unemployment Trust Fund is critical to New Hampshire citizens who depend upon this temporary financial support, especially during a time of economic recession. However, we also remain mindful that New Hampshire business owners also deserve a break on their taxes,' said Senate President Peter Bragdon. 'Now that the trust fund's balance has been restored to an appropriate level, it is absolutely appropriate to reduce the amount paid into it by employers who are also feeling the negative effects of the bad economy.'
Senate Finance Committee Chairman Chuck Morse, R-Salem, also applauded the tax reduction.
'As a small-business owner who pays into the Unemployment Trust Fund, I applaud the move to reduce the tax by .5 percent,' Morse said. 'I firmly believe we will see positive results because of today's action.'
House Republican leaders, including Speaker William O'Brien, blasted Democrats for imposing the surcharge.