by: Lori Geary Updated:
ATLANTA,None - Georgia business owners may get sticker shock when the open up tax bills from the federal government.
Channel 2 Action News has learned the federal government plans to double the unemployment insurance tax on every private employee. The rate increase is intended off set a $720 million loan that the state of Georgia borrowed to pay unemployment benefits.
Channel 2’s Lori Geary discovered that many Georgia lawmakers did not know about the tax increase.
Geary also learned that the state may also have to cut unemployment benefits to make up some of that loan.
Labor Commissioner Mark Butler told Geary, “No doubt, it’s a very large problem.”
Starting Jan. 1, the federal unemployment insurance tax that Georgia business owners pay will double from $21 to $42. Butler said his office will start sending out notifications about the increase soon.
State Rep. Sean Jerguson said he found out about the increase when Butler informed the Republican caucus and now he’s quickly trying to spread the word in his district in Cherokee County.
“It was shocking to the legislature,” said Jerguson. “Everybody that I have spoken to has not been aware of it. I was made aware of it last Tuesday.”
The state borrowed $720 million dollars from the federal government when Georgia’s unemployment trust fund ran dry.
The unemployment insurance tax increase will only cover a small portion of the loan, so to chip away at the principal Butler is proposing that unemployed Georgians wait a week before receiving benefits. Butler told Geary he also wants to reduce the amount of weeks the state employment benefits run from 26 to 20 and reduce the top tier benefit from $330 to $300.
So far, Georgia has paid the federal government $21 million in interest on the loan. That money came out of the state’s general fund which also pays for education, health care and public safety.
“It’s (the loan) at 3.94 percent, which if you take a look at what the Fed is loaning money to banks, it's kind of highway robbery quite frankly” Butler said.
“The federal government is charging the state of Georgia 16 times the rate that they charge other credit worthy institutions. I would much rather see our tax dollars be spent in the classroom educating our children than paying the federal government a loan,” Jerguson said.
Next year’s payment will be $26 million. Officials said the loan is not likely to be paid off before 2015.