Obama Expected to Propose Payroll Tax Changes

The Obama administration is expected to propose a way for states to raise more money in payroll taxes to pay for the cost of unemployment insurance.

State unemployment trust funds would be able to raise the amount of wages subject to unemployment taxes from companies, from $7,000 to $15,000, starting in 2014, according to The Wall Street Journal.

However, under the plan, states would be able to avoid raising taxes on businesses for the next two years to cover the interest owed to the federal government on money borrowed to fund their unemployment benefit programs, according to the Washington Post. The administration would also suspend the automatic increases in federal unemployment tax that employers would have to start paying in many states before the end of 2012.

The plan to raise taxes on employers in 2014 has been receiving mixed reviews already, however, even before it is scheduled to be announced with the rest of the administration’s budget proposal next week.

“I strongly urge the White House to reconsider this job-destroying proposal,” said Senate Finance Committee ranking member Orrin Hatch, R-Utah, in a statement. “Either employers will have less money to hire or workers will face reduced wages. Neither makes any sense and runs counter to our shared goal of getting the American people back to work.”

House Ways and Means Committee Chairman Dave Camp, D-Mich., said the proposal would not be “going anywhere in the House.”