Alternative Methods of Experience Rating Unemployment Insurance Employer Taxes. (7th November 2019)

• Record Type: Journal Article
• Authors: Miller, Michael; Pavosevich, Robert
• Is Part Of: Public budgeting & finance. Volume 39:Number 4(2019)
• Page Start: 28
• Page End: 47
• Publication Date: 2019-11-07
• Subjects: Budget -- United States -- Periodicals; Budget -- Periodicals; 352.4
• DOI: 10.1111/pbaf.12244
• Languages: English
• ISSNs: 0275-1100

Abstract

Abstract : For most states the methodology used for assigning Unemployment Insurance tax rates to employers arose when the program was first established in 1935. More than 80 years later, with evolving employment relationships, state systems have become outmoded. This paper critiques current experience rating methods and presents new methodologies that are much easier to operate and that improve the incentives for employers to increase employment. The proposed methods would assess taxes based on employment or payroll variation such that growing firms would have lower taxes. A simulation analysis illustrates the impact of the new methods on employer groups.