Federal Unemployment Tax

Background
 
The Federal Unemployment Tax Act (FUTA) was passed in 1939 to guarantee financing for a national employment security system. The idea was for employers to pay the costs of administering an unemployment compensation and national job placement system. In return, employers would receive assistance in recruiting new workers and the unemployed would be able to find jobs more quickly.

The current maximum tax imposed is at a rate of 6.2 percent on the first $7,000 paid annually by employers to each employee, including the “temporary” surtax of 0.2 percent that was added in 1976 and extended through 2007.

U.S. Chamber Position

The U.S. Chamber believes it is time to end the “temporary” FUTA surtax and stop all attempts to collect the FUTA tax on an accelerated payment schedule.

It is also time to take a closer look at the system to determine whether it is working properly, whether the federal government is collecting an appropriate amount of money from employers, whether claimants are receiving adequate benefits, and whether the states are receiving a sufficient return of dollars to fund services promised to workers and employers.