Tax hike to pay for unemployment could hurt job creators

Florida will hike business' unemployment tax rate

WEST PALM BEACH, Fla. - When Floridians are out of work, the unemployed aren't the only ones who suffer. Nearly 11% of the state's workforce is out of work and Florida has borrowed more than two billion dollars from the federal government to pay for their jobless claims. Now, a new tax increase to cover the cost of unemployment could be crippling the very people trying to provide new jobs.

For the last 13 years, Pizza Girls has been serving up lunch and dinner in West Palm Beach. Owner Jennifer Morales, has had the joy of growing her business. She's hired eleven of the area's finest servers and pizza makers; however, now Florida's plan to pay for its jobless claims will be taking a large slice out of her business.

The plan will raise the minimum unemployment tax on each employee next year from $72.10 dollars to $170 per quarter, up to a maximum of more than $450 dollars per worker per quarter.

Morales will have to find a way to pay for this expense.

"I'm not even going there yet. I'm not prepared with that answer," she said. "What is a small business supposed to do? We can't keep raising our prices and I don't know. We keep taking the hit."

Mark Bush, a finance and accounting professor at Northwood University's De Vos School of Business in West Palm Beach, said expect this to further slow down the economy as it hurts the very businesses that could help lower unemployment.

"I don't think you'll see an expansion in hiring because of this increase," he said. "Because there will be additional costs to the employers so it will have an impact on the number of people who will be willing to hire employees, especially the small business owners."

"Of course, we don't want to lay people off," said Morales. "We have jobs. We want to continue hiring people."

As she and other business owners look ahead to next year, Morales said she'll be adjusting her expenses to prepare for this very unwelcome one.

Professor Bush said there may be some encouraging news. Unemployment in Florida went down this past week. If it continues to decline, he said look for the unemployment tax rate to also drop in the future.

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