Chamber Strongly Opposes $63 Billion Unemployment Tax Increase on Employers

February 22, 2016

President Obama’s proposed 2017 budget would increase employers’ unemployment insurance (UI) taxes by nearly $63 billion and, from there, put UI taxes on auto-pilot for annual increases. The Michigan Chamber is strongly opposed to this proposal and will be fighting this massive tax increase on employers in the coming weeks and months. 

The President’s budget includes an increase the federal UI taxable wage (TWB) base in 2018, taking that tax from $7,000 to $40,000 and then indexing the TWB to growth with increases in the annual wage. If this provision were to be adopted, Michigan would be required to raise its TWB from $9,000 to meet the federal “floor” of $40,000 and build in automatic increases from there. The TWB provision would increase employers’ federal tax burdens by another $46.3 billion over 10 years. We are still working to determine the additional impact the forced change to the state’s TWB would have on Michigan employers’ tax burdens. 

The President’s budget also includes an increase in the federal UI tax (FUTA tax) by reinstating an expired surtax. The surtax would be effective for wages paid after December 31, 2016. The surtax reinstatement is projected to cost employers $16.4 billion over the 10 years ending 2026. 

This proposal would have a chilling effect on Michigan employers. We are extremely concerned about the impact of this proposal and will be communicating these concerns to Michigan’s congressional delegation in the coming weeks and months.