Florida businesses are about to get socked with the biggest tax increase in more than a decade. Businesses will pay three times as much in unemployment compensation taxes to offset a dropping reserve fund caused by all the unemployment claims filed in the past two years.
The tax hike comes at a bad time for businesses and politicians. Flower shop owner Sandy Thompson is looking at a big tax hike this spring. At a time when Gov. Jeb Bush is pushing for more tax relief for businesses, Sandy and other business owners will see their unemployment compensation taxes skyrocket. The timing's terrible.
“We've seen in our industry flower shops close, we've seen other employers that are still in business in the florist industry either diminish hours or actually let go of employees,” says Sandy Thompson of Artistic Flowers.
The tax is based on the number of workers you have and how much you've paid in unemployment claims. Businesses will pay at least $15 and 40 more per employee this April. That's about triple the current tax rate. When the state fund for unemployment benefits dips below a certain level, the tax goes up.
Steve Birtman of the National Federation of Independent Businesses says at least the tax hike is coming at a time when Florida's financial picture is improving.
“This is going to hurt some segments of the economy, but hopefully the demand for employees and new business with counteract this tax increase,” says Birtman.
And business owners understand the tax is needed to keep the unemployment fund strong, but that doesn't make it easier to swallow.
“There's a big crunch out there and to know that we're going to have a negative impact once again, it's, it's going to be tough,” adds Sandy Thompson.
And a tax hike is never welcome in an election year, especially for incumbent politicians touting their tax cuts. State Department of Revenue spokesman David Bruns says Florida's unemployment compensation trust fund is in much better shape than many other states. He says while states like New York and Texas have funds that are essentially broke.
Florida's fund has more than $1 billion thanks to this automatic tax increase. Businesses must have their unemployment compensation tax reports in to the state by April 30.