Jobless Fund Surcharge Wallops Md. Firms; Shrinking Balance Triggers Monstrous' Rise
As if the recession weren't bad enough, a new tax surcharge is forcing Maryland businesses to pay far more than their normal unemployment insurance premiums because the state unemployment compensation fund has reached an eight-year low.</br></br>The surcharge, expected to cost Maryland businesses $250 million this year, will start hitting employers in the coming weeks as they make their first-quarter payments to the state. The new rate is 23 times as high for those companies paying the minimum amount per employee.</br></br>"For some employers this increase will be monstrous," said Sen. Thomas Patrick O'Reilly (D-Prince George's), chairman of the Senate Finance Committee. "It will be unbelievable for some people. They won't understand it. And they will be outraged." "We expect to have to pay 2 1/2 to three times the amount we had been paying" in unemployment premiums, said Ruth Bloom, spokesman for Vitro Corp., a defense contractor based in Silver Spring that has 2,100 employees.</br></br>Because the cost will have to be passed on to Vitro's clients, she said, "it disadvantages us . . . with our non-Maryland competitors." She declined to say precisely how much the new tax will cost the company.</br></br>At a minimum, a company with 2,100 workers will pay $338,100 under the new tax rate, up from the previous minimum of $14,700. The highest possible rate for a company that size will be $1,117,200, up from a maximum of $955,500. The rates apply to the first $7,000 of each worker's salary and are higher for companies that have recently let workers go.