Feds waive unemployment tax increase for NC firms

Posted November 12, 2014

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— The U.S. Department of Labor has waived a planned increase to the federal unemployment tax rate paid by North Carolina employers, saving firms about $180 million for the 2014 tax year, Gov. Pat McCrory said Wednesday.

The tax increase was designed to help pay back money the state borrowed from the federal government to pay jobless claims during the recession. North Carolina owed more than $2.5 billion in 2012 but has since changed its unemployment program and has paid back all but $465 million of the debt.

“Restructuring North Carolina’s unemployment insurance system and aligning it with those of our neighboring states has set our unemployment program on a path to sustainability,” McCrory said in a statement. “By demonstrating to the federal government that we have cut up the federal unemployment insurance credit card, North Carolina employers will avoid paying penalties and be able to invest those funds in job creation.”

Dale Folwell, an assistant secretary with the state Department of Commerce who heads the Division of Employment Security, called the waiver "great news for the employers of North Carolina" and said the state hopes to finish paying off the debt next year.

"Once the debt is paid off, employers will begin receiving their full Federal Unemployment Tax Act credit," Folwell said. "This will be a tremendous burden lifted from the employers of this state. It will give them certainty about the cost of doing business in North Carolina. It will also encourage new businesses to come to this state, driving unemployment even lower.”

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  • Tom Boswell Nov 13, 2014
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    When McCrory took office he inherited 2.5 billion owed to the Federal Government for unemployment benefits. In 21 months he has brought this down to 465 million. Incredible especially since we ALL received lower tax rates. The Tax Foundation's web site had us ranked 44th under Perdue and in one year we went to 16th in individual tax burden. They said it was the largest jump in the their history. Teachers just received one of their largest raises in history. The raise was more than five years combined that Democrats gave them ending in 2010 when they controlled everything for those five years. CNN/Money just released the states GDP figures and North Carolina's was highest in the south, 6th highest east of the Mississippi and 16th highest overall. Since McCrory took office the U6 unemployment rate which the N&O stated is the most realistic has dropped by the 5th largest amount in the country. He is still dealing with the 2.5 billion dollar debt left him from the Democrats two year budget