Many Maryland employers to see unemployment insurance tax reduced by 55 percent
Governor Martin O’Malley joined Speaker Michael Busch and Maryland Department of Labor, Licensing and Regulation Secretary Leonard J. Howie III to announce that beginning January 1, 2013, most Maryland businesses will see their unemployment insurance taxes drop. Improving the unemployment insurance trust fund has been a priority for the O’Malley-Brown Administration.
“In Maryland, we are moving forward. This progress doesn’t happen by chance, but by the choices we’re making together to build a strong, growing and resilient economy,” said Governor Martin O’Malley. “Working closely with business, labor and the General Assembly, Maryland businesses will see a significant cut in their unemployment insurance rate – many as much as 55 percent. That’s good news for all Marylanders.”
At $794,535,858.84, Maryland has the fifth highest trust fund balance in the country. The balance in the trust fund is healthy enough to trigger a key rate change for 2013. In 2012, Table F was in effect with a range of tax rates of 2.2 percent to 13.5 percent of the first $8,500 in annual wages. For calendar year 2013, Table C will be in effect. The range of rates is 1.0 percent to 10.5 percent of the first $8,500 in wages. All businesses will benefit from the State unemployment insurance tax table moving downward from Table F to Table C.
“By working together when times are tight, we’re now seeing significantly reduced unemployment insurance taxes for Maryland’s employers, adding further fuel to our economic recovery,” said Secretary Howie. “Thanks to the leadership of Governor O’Malley and the work of our partners in the General Assembly, we are far ahead of most states in this area,” said Secretary Howie, noting that 19 other states have loans from the U.S. Government to pay unemployment insurance benefits.
By not having a Trust Fund Loan, Maryland employers have not had an increase to their federal unemployment insurance tax (FUTA) and have not had to pay interest obligations. Twenty states had increased FUTA payments in 2011 including Virginia, Pennsylvania, New Jersey and New York.
“Lower tax liabilities will have positive consequences for Maryland’s employers, workers, and the economy. They are the direct result of the prudent decisions made by Maryland business leaders, labor, the legislature, and the O’Malley Administration. Maryland is well-positioned to seize new economic opportunities,” said Ronald Adler, President-CEO of Laurdan Associates, Inc., Chair of the Maryland Chamber of Commerce UI Subcommittee and member of the UI Oversight Committee.
“The reduced costs are welcome news for Maryland businesses; the ability to lower the unemployment tax rates is a sign that the state’s economy is improving. We must stay vigilant and continue working together to improve employment and return the Trust Fund to its $1 billion fully healthy position,” says Tom Hood, CPA, CEO and Executive Director of the Maryland Association of CPAs.
“This tax reduction will spark business expansion and a stronger, more optimistic Maryland,” noted Jay Steinmetz, CEO of Barcoding, Inc. and a member of the Governor’s Commission on Small Business.
Reflecting the recovery of the fund, the range of unemployment insurance rates will be significantly lower in 2013, compared to the rates in the prior three years. The tax rates are established each year according to law, based upon the health of the Trust Fund on September 30. This year the balance was $794,535,858.84, compared to $460,222,356.99 on September 30 of last year. Weekly benefit payouts have declined steadily since peaking in 2009.
According to the U.S. Chamber of Commerce, Maryland ranks #1 in the nation for Innovation and Entrepreneurship, and remains one of the best-positioned states to grow, create jobs and prosper in the coming years. Maryland remains only one of eight states to maintain a Triple A bond rating, certified by all three rating agencies. Maryland’s businesses have the 6th lowest average tax burden according to Ernst and Young. The Milken Institute ranks Maryland #1 for human capital capacity, and the Kauffman Foundation ranks Maryland #3 for the state’s ability to win in the New Economy in the 2010 State New Economy Index.