The state Legislative Analyst's Office highlights that current payroll tax in California cannot fully cover current unemployment benefits, let alone build reserves. This issue is further complicated by historical choices made during the Great Recession, including the doubling of unemployment insurance benefits by then-Governor Gray Davis, which led to a significant state debt and long-term federal payroll tax increases.
The state Legislative Analyst’s Office notes that current state payroll tax cannot fully cover current unemployment benefits, much less build reserves.When the Great Recession struck California 17 years ago and hundreds of thousands of workers lost their jobs, the state’s unemployment insurance system crashed.
It should have been a lesson for political policymakers about instant gratification and financial responsibility, but it wasn’t. In addition to a double dose of financial problems, the Employment Development Department has also experienced managerial failures.Meanwhile employers are still repaying the last loan, and the state’s insurance fund is continuing to run deficits,
• Increase the taxable wage base from $7,000 per worker to $46,800, tying it to the actual benefits of up to $450 a week. It “would place California among the ten states with taxable wages bases above $40,000 and all other Western states.” • Refinance the federal loan with a bond backed by payroll taxes and state loans from its internal sources to reduce overall interest costs.Opinion: Trump’s of Stanford professor Jay Bhattacharya pick to lead the NIH gets some things right
California Unemployment Insurance Legislative Analyst's Office Payroll Tax Great Recession
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