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WA Senate passes bill to lower unemployment insurance tax hit next year

A woman heads into a restaurant with its windows covered by sheets of plywood, one block south of the State Capitol. (AP Photo/David Zalubowski)

The Washington State Senate unanimously passed a bill to lower the unemployment insurance tax hike for small businesses next year.

Unemployment insurance is paid solely by taxes on business owners. The taxes are set to skyrocket in the next few years to refill the Unemployment Trust Fund, which has been all but depleted from the record number of people on jobless benefits this past year.

Senate Bill 5478 sponsor Sen. Karen Keiser (D-Des Moines) explained that this bill would help relieve businesses by “buying down” their unemployment insurance premiums in 2022. Unfortunately for small businesses, those industries that were hit hardest by COVID are the ones tending to see the highest spikes in unemployment insurance. That’s because the businesses that had to close or reduce capacity the longest have had to resort to laying off the most employees.

“When you have a car accident, usually your car insurance goes up,” Keiser explained. “In unemployment insurance, if you lay off employees, your premium goes up for unemployment insurance for each employee that you have. Some employers are seeing very big jumps.”

New bill promises help for WA businesses still feeling unemployment tax pain

One gym owner who has had to be closed or operate at reduced capacity for the past year told KIRO Radio’s Dori Monson his unemployment taxes went up by a factor of 10.

This is why Keiser’s bill especially targets the industries hit hardest by the pandemic, such as service and tourism.

“The premiums will be able to be reduced for those employers, those targeted employers, that have been hit especially hard — those are obviously in the restaurant industry, the hospitality industry, in the travel industry, and the tourism and transportation industry, in many other retail sectors, and in gyms,” she said.

The bill would set aside $500 million in state funds to help buy down premiums, with $250 million of that going to 15 specific hardest-hit industries. Besides the industries mentioned by Keiser, this would also include areas such as performing arts, museums and galleries, recreation, laundry, and personal services, such as hairdressers.

“This bill is very targeted,” said Sen. Mark Mullet (D-Issaquah). “It tries to provide extra support for those that were hardest-hit, but it does provide support for everyone, no matter what industry that was impacted.”

Keiser pointed out that “the Amazons and the Costcos and the big grocery chains are doing well during this pandemic,” while so many small businesses continue to suffer.

“We still have 80,000 restaurant employees unemployed. We have many, many restaurants and hotels that are operating at 25% or 30%, up to 50% capacity is the maximum, and many others are really not doing well,” Keiser said.

Another unemployment tax bill passed the Legislature earlier this session to help businesses with unemployment taxes this year, but this bill goes further to give them more help next year. Republicans, while supportive of the first bill, had advocated during its previous hearings for using state funds to help refill the trust fund and offset the tax burden for businesses. They were appreciative that this latest bill does just that.

“We talked about, ‘We need to do more for our businesses, we need to try and go beyond just what that first [unemployment insurance] bill did’ … this bill goes a long way to help a lot of our businesses that have been struggling mightily over the last 14 months,” said Sen. Curtis King (R-Yakima).

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