Payroll Accounting And State Payroll Taxes Considered
If you do payroll accounting, you can be sure that the payroll taxes and withholding will increase over the next few years. The states have really no way out – they have to increase state payroll taxes. And as more and more people are out of work, that means that unemployment insurance, and benefits will also have to decrease in duration and payouts. The state budgets are severely stressed, and there is no other way to get around this.
In fact, on November 20, 2010 there was an interesting article in the Wall Street Journal titled; “States Raise Payroll Taxes to Repay Loans, Demands on Depleted Unemployment – Insurance Funds Led to Borrowing of Nearly $41 Billion from Federal Government,” by Sarah Murray, which brings up an interesting point, and something that you will have to consider if you do the payroll taxes, and payroll accounting in your company.
Regardless of what anyone says payroll taxes will have to be increased so that the states can fund their shortfalls. Many states did borrow money from the federal government so they could afford to pay their unemployment benefit promises to workers who are out of work, but at some point the states that did borrow the money are going to have to pay back those funds to the federal government. Of course, if the federal government continues to botch the economic recovery, there’s a good chance that states could go bankrupt trying to repay this.
Therefore, there is only one thing the states can do – that is to raise the payroll taxes on everybody who is still working, and as we know if we raise taxes on people’s payroll, they will have less spendable money, and many families are barely surviving as it is, as so many workers have taken underwhelming, unfulfilling, and quite frankly underutilize jobs – they’re basically underemployed. And in this case they can barely pay the taxes that are taken out of their paycheck now, because those paychecks are not enough for to them to survive on, and they are also living on borrowed time.
It appears that Texas, Hawaii, Arizona, California, Indiana, and many other states see this is an anvil to their own states economic recovery. That money has to come from somewhere, and right now those states are cutting schools, and other essential budgetary items to keep up with the onslaught, and ever-increasing costs of unemployment.
So be on the lookout for increased payroll withholding taxes from state governments. They are coming fast, and there is no way to stop them. Indeed, I hope you will please consider all this, and get ready to adjust your payroll accounting appropriately in the near future.