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Research & Policy
Policy Matters Ohio

Unemployment Tax Rate Cut: Fund Is Broke

May 13, 2010

Unemployment Tax Rate Cut: Fund Is Broke

May 13, 2010

Ohio's unemployment compensation trust fund is broke and owes more than $2 billion to the federal government. Unemployment compensation is funded by payroll taxes paid by employers and these taxes are expected to rise when needed to pay for higher benefit levels. Yet most rates in the Ohio unemployment rate tax schedule went down this year.  That's because one key part of what makes up each employer's tax was reduced in 2010 by $18 per employee, or tens of millions of dollars in total. Ohio needs to eliminate such automatic tax cuts and take other steps to reverse the chronic underfinancing that helped cause the fund to go broke.

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