FUTA surtax

[veritas]

to end.

http://www.accountingtoday.com/news/Temporary-FUTA-Surtax-Expires-35-Years-59061-1.html

[Snaggletooth]

Practical Benefit

On the face of it, the FUTA tax drops from 6.2% to 6.0% on the first $7000, according to what I read from the link.

When you try to draw a practical benefit, the real effect may be elusive.

Virtually no one was "paying" the 6.2% because of the various SUTA credits from state-to-state. Even though 6.2% may have been reported on the 940, credit was given for state SUTA payments that were made on time. The credit was 5.4%. If the state rate was higher, the employer was entitled to only a 5.4% credit. If the state rate was lower, the employer still got 5.4% credit. Certain states were not entitled to full credit if they had borrowed from the Feds and had not paid back.

So what does the "new" credit amount to? If it remains at 5.4% then there is really and truly a reduction of 0.2% and the employer (in general) pays 0.6%.

And when does the reduction take effect? Govt fiscal year beginning 10/01/11? after employers have paid most of the tax already? Will they get anything back?

Lots of questions. Might be some good for employer taxes, might be a smoke and mirrors trick. At this point it is probably intended to be a real reduction, but no telling when it is effective.

[Davc]

It took affect on 7/1. However, some of the reference companies feel it will probably change back before years end and will be retroactive.

[JohnH]

I'm generally opposed to increasing taxes of any kind, but this is one tax that I think should stay in place. I'm also opposed to states ever assigning a "zero" tax rate to any employer, not matter how good their experience rating might be. (Call it the "Joseph" principle)

[Nashville]

Deficit Reduction

Look for this 0.2% reduction to fall apart under the scrubbing of deficit reduction.

Has all the markings of something too easy to tack back on. Raises billions. Can be maintained without calling it a tax increase.

I believe its only chance for survival is if the deficit reduction task force fails to see it.