Tags: Taxes | small | business | hiring

Fortune: Rise in Unemployment Taxes Stymies Small Hiring

By    |   Sunday, 22 July 2012 04:10 PM

Unemployment taxes are on the rise for businesses, as state governments seek to raise funds to pay jobless benefits.

And those tax increases are making it difficult for small businesses to hire more workers, Fortune magazine reports.

“After four years with a U.S. jobless rate hovering above 8 percent, states have run out of money,” writes Fortune’s Nina Easton. “They've borrowed from the federal government, and are now raising taxes on business.”

So we face a scenario where a system designed to help victims of layoffs get back on their feet actually prevents them from doing so. That’s because the tax increases take money from companies that they could otherwise use to hire new workers.

The hiring predicament of small businesses shines through clearly in the National Federation of Independent Business’ (NFIB’s) June survey of its members.

"NFIB members didn't add a lot of jobs and don't plan to in the coming months," the group said.

Taxes and government regulation/red tape represent the most important problems facing small business, 40 percent of survey respondents said.

But former Labor Secretary Robert Reich isn’t buying it. He says taxes aren’t the main problem.

“The real reason businesses aren’t creating more jobs is American consumers — whose purchases constitute 70 percent of U.S. economic activity — don’t have the money to buy more, and they can no longer borrow as before,” the University of California, Berkeley, professor writes in The Nashville Tennessean.

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Sunday, 22 July 2012 04:10 PM
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