U.S. News: Job Tax Plan Lands With a Thud --- Hill GOP Leader Says Obama Proposal 'Isn't Going Anywhere,' but Some State Officials React Positively
Republicans on Capitol Hill responded with hostility Tuesday to a White House proposal to allow cash-strapped states to raise unemployment-insurance taxes. But in some states struggling with rising debt and empty coffers, officials said the plan should be considered.</br></br>Administration officials say the proposal, to be included in President Barack Obama's budget plan for the next fiscal year, is intended to help states that so far have borrowed $42.4 billion from the federal government to keep benefits flowing after exhausting the reserves used to pay unemployment benefits.</br></br>Some of those 31 states have borrowed so heavily, and repaid the loans so slowly, that they triggered automatic tax increases designed to reimburse the federal government.</br></br>Already, employers in three states -- Michigan, Indiana and South Carolina -- are paying higher federal unemployment taxes because of state debts to Washington. More than half the states could be hit by the end of the year.</br></br>It is unclear whether trade groups and state GOP leaders will favor the deal and pressure congressional Republicans at least to negotiate over the plan, especially as employers in more states incur penalty taxes. An Obama administration economist said those rising taxes would feel like "a gun to the head" of employers in those states.