Condotta: Payroll taxes would increase under new legislation

Majority party looks to increase unemployment insurance rates despite faltering economy


audio In the midst of an economic crisis and an 8.4 percent unemployment rate, Washington state’s majority party leaders today did not keep their commitment to not raise taxes on struggling employers. Despite objections by Rep. Cary Condotta, Republican leader on labor issues, the House Commerce and Labor Committee passed Senate Bill 5963 by a vote of 5-3 to await a House vote.

“There was an implied agreement that as we added benefits to assist those out of work, there would be equal balance and weight given to adjust bloated unemployment insurance rates employers pay that created the $2 billion surplus,” said Condotta, R-East Wenatchee. “We made a commitment to help the unemployed and we kept it. The majority party’s commitment was to create a fairer tax system for employers and they didn’t live up to it. This situation is very disappointing.”

Condotta explained that earlier in the session House Bill 1906 was passed to increase unemployment insurance benefits to those receiving the checks. As a compromise with the employer community, an agreement was reached to support the benefit increase with the understanding that the over-taxation of employers, which created the $2 billion surplus in the UI trust fund, would be addressed swiftly and without tax increases on employers.

The Senate proposal, as amended in the House, would gut the compromise and put in place triggers that increase taxes at the point when employers and the economy are headed into an upswing.

Even the chair of the committee acknowledged businesses are struggling under the current economy, which is eroding their ability to keep their doors open. In the hearing, he described the current unemployment situation as a “tidal wave.”

Why then, asked Condotta, would he and his colleagues even consider a payroll tax increase right now?

“Make no mistake, this bill will raise taxes on employers at a time when they can least afford it,” said Condotta. “The unemployment program is complex, but the gist of the situation is instead of tweaking the rate structure to create balance that ensures workers have benefits and employers aren’t over-taxed, the measure would put in place triggers that raise taxes on employers.”

Businesses will be hurt by the mechanisms in this bill, Condotta explained, which will only lead to higher unemployment in the state.

“The end result of this bad policy will be higher unemployment, more businesses going under and less taxes being paid into the system to help displaced workers,” Condotta said.

Senate Bill 5963 now awaits a vote on the House floor where Condotta said he looks forward to the debate on the flawed policy.

“We had an agreement to help our struggling employers, and it should honored,” he concluded.

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For more information, contact: Bobbi Cussins, Public Information Officer: (360) 786-7252


Washington State House Republican Communications