Policy Matters Testifies on Unemployment Compensation Tax Avoidance
April 5, 2005
State unemployment insurance systems are losing millions of dollars a year due to company manipulation of their tax rates. Under such schemes, known as SUTA dumping, companies transfer their employees to other entities in order to avoid paying the unemployment taxes that they should be paying. State statistics provided to the Government Accountability Office in 2002 show that the average amount of taxes underpaid by SUTA-dumping businesses was more than $600,000. Last year, Congress passed a bill requiring states to crack down on such practices, and Senate Bill 81 has been introduced in Ohio in part to conform to federal requirements. However, the bill does not go far enough. On April 5, 2005, Policy Matters Ohio’s Wendy Patton testified before the Senate Insurance, Commerce and Labor Committee and recommended ways to strengthen the bill.