The minimum unemployment tax rate paid by Florida business will shoot up by nearly 200 percent in the new year, adding to businesses’ financial burdens during the coronavirus pandemic, according to the Florida Chamber of Commerce.
Although the state Department of Finance has not yet released the tax rate numbers, chamber officials said they had seen the new rates, which would increase from $7 per worker for the minimum tax rate to $20.30 per employee.
The rate increase comes as the state’s trust fund that is used to pay unemployment claims dipped below $1 billion last month. The new rate provisions in what's now called the reemployment tax will help stabilize the trust fund, which has been sapped as unemployment surged as a result of efforts to slow the spread of COVID-19.
“A smaller business might not have as big of an overall dollar impact as, let’s say larger employers, but if a small business has never laid off an employee, they’re seeing an increase of $13 per employee through no fault of their own,” Carolyn Johnson, the chamber’s director of business, economic development and innovation policy, told the Florida Record.
Businesses that pay unemployment rates above the minimum will also see rate increases beginning in 2021, according to Johnson. The exception would be those businesses paying the maximum rate of 5.4 percent of an employee’s taxable wage base of $7,000.
In comparison, the minimum rate will increase from 0.1 percent to 0.29 percent, according to the chamber.
Business owners will be able to correct any mistakes that are made on their tax bills, Johnson said. And state lawmakers could opt to step in to take legislative actions to minimize the financial pain businesses are dealing with, she said.
“The chamber is forming a working group to take a look at this issue with our members and is looking at proposals to bring to the legislature,” Johnson said, adding that a major chamber concern is that businesses that kept all their employees on the payroll during the pandemic will next year pay more and bear a greater share of the tax increase.
“The employers that didn’t do anything wrong, that are keeping their workforce and not laying off employees, are the ones getting the tax increase,” she said.
Johnson noted that the state’s unemployment trust fund remains solvent and that Florida has not had to borrow from the federal government during the health emergency.
“We did have issues with the trust fund related to the number of applicants at the beginning of the Covid shutdown,” she said, noting that the state’s Department of Economic Opportunity is committed to making the system work better in the future.
Florida businesses are also bracing for increases in the minimum wage next year as a result of a ballot measure approved by voters in November.