[Congressional Record Volume 144, Number 78 (Tuesday, June 16, 1998)]
[Senate]
[Pages S6405-S6407]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ALLARD (for himself, Mr. Brownback, and Mr. DeWine):
  S. 2170. A bill to amend the Internal Revenue Code of 1986 to 
eliminate the temporary increase in unemployment tax; to the Committee 
on Finance.


            legislation to repeal temporary unemployment tax

  Mr. ALLARD. Mr. President, today I introduce legislation to repeal 
the ``temporary'' 0.2 percent Federal Unemployment Tax (FUTA) surtax.
  The ``temporary'' surtax was enacted by Congress in 1976 to repay the 
general fund of the Treasury for funds borrowed by the unemployment 
trust fund. While the borrowings were repaid in 1987, Congress has 
continued to extend the surtax in tax bill after tax bill.
  Since 1987, Congress has used extension of the surtax to help pay for 
tax packages. In fact, the surtax was most recently extended to help 
pay for the 1997 tax bill.
  This is unfair to small business which has been told repeatedly that 
the surtax was temporary and would be

[[Page S6406]]

repealed when it was no longer needed to finance the unemployment tax 
system.
  The reason for the FUTA surtax no longer exists. The economy is 
experiencing the highest level of employment in decades, and all state 
unemployment funds have surpluses.
  It is inappropriate for the government to continue to raise surplus 
unemployment taxes and use those surpluses for purposes totally 
unrelated to the unemployment tax system.
  The FUTA surtax hits small businesses hardest because they are often 
labor intensive. Any payroll tax is added directly to the employer's 
payroll costs, and payroll taxes must be paid whether the business has 
a profit or loss.
  Mr. President, prior to my election to the House of Representatives 
in 1990, I ran a small business. I am well aware of payroll taxes and 
the burden that they can place on a business.
  The unemployment surtax was in place when I ran my small business.
  I suspect that my view of the surtax is similar to the view of most 
small business owners. It is one thing to have a surtax when 
unemployment is high. It is totally unjustified when unemployment is at 
the lowest level in three decades.
  What really upsets small business owners is the fact that the 
government is breaking its commitment that the surtax would be 
temporary. This is not the way the federal government should do 
business.
  Repeal of the 0.2 percent surtax will reduce the tax burden on 
employers and workers by $6 billion over the next five years.
  Lower payroll taxes mean higher wages for workers. While the employer 
appears to fully pay the unemployment surtax and other payroll taxes, 
the economic evidence is strong that the cost of payroll taxes is 
passed on to workers in form of lower wages.
  Consistent tax relief will help to ensure that our economy remains 
the strongest and most competitive in the world. Low taxes reduce 
unemployment and help ensure that future surtaxes are unnecessary.
  Mr. President, I ask that the text of the bill be printed in the 
Record along with several charts showing the level of State 
Unemployment System Reserves from 1991-1997.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                S. 2170

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. REPEAL OF TEMPORARY UNEMPLOYMENT TAX.

       Section 3301 of the Internal Revenue Code of 1986 (relating 
     to rate of unemployment tax) is amended--
       (1) by striking ``2007'' in paragraph (1) and inserting 
     ``1998'';and
       (2) by striking ``2008'' in paragraph (2) and inserting 
     ``1999''.
                                  ____


                    STATE UNEMPLOYMENT COMPENSATION SYSTEM RESERVES AND RATIO OF RESERVES TO TOTAL WAGES BY STATE AND YEAR, 1991-1995
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Net reserves as of Dec. 31 of each year (thousands)           Ratio of year-end reserves to total wages
                                      ----------------------------------------------------------------------                  (percent)
                State                                                                                       --------------------------------------------
                                           1995          1994          1993          1992          1991        1995     1994     1993     1992     1991
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama..............................      $534,470      $551,842     $570,118      $550,280      $585,725      1.61     1.77     1.94     1.96     2.24
Alaska...............................       201,017       210,563      227,911       232,320       243,155      3.56     3.81     4.32     4.57     4.98
Arizona..............................       534,640       432,449      368,782       372,423       437,667      1.48     1.33     1.26     1.36     1.71
Arkansas.............................       200,866       169,795      134,432        81,340       103,629      1.12     1.02     0.87     0.55     0.76
California...........................     2,104,220     2,092,695    2,450,402     2,786,713     4,190,197      0.68     0.72     0.87     0.99     1.52
Colorado.............................       480,582       434,482      390,435       339,246       312,036      1.22     1.21     1.15     1.10     1.09
Connecticut..........................       116,692         3,311        1,062      (653,215)     (353,767)     0.27     0.01     0.00     0.00     0.00
Delaware.............................       271,807       244,013      225,943       218,719       223,685      3.24     3.14     3.05     3.04     3.20
District of Columbia.................        68,636        41,141        5,937       (19,286)       12,465      0.57     0.35     0.05     0.00     0.12
Florida..............................     1,806,432     1,621,614    1,505,570     1,443,603     1,691,814      1.53     1.47     1.45     1.47     1.84
Georgia..............................     1,453,118     1,281,507    1,094,999       965,870       962,324      2.03     1.95     1.79     1.68     1.81
Hawaii...............................       213,496       232,859      310,155       362,123       420,991      2.07     2.26     3.01     3.57     4.39
Idaho................................       243,090       245,096      247,823       240,141       243,573      2.88     3.14     3.49     3.67     4.09
Illinois.............................     1,629,210     1,247,066      851,918       847,622     1,172,283      1.22     0.99     0.71     0.74     1.08
Indiana..............................     1,228,070     1,132,343    1,024,658       941,632       899,139      2.16     2.11     2.05     1.99     2.02
Iowa.................................       725,149       708,450      655,066       615,474       594,626      3.10     3.23     3.20     3.16     3.27
Kansas...............................       704,008       735,717      658,053       605,827       571,904      2.77     3.20     3.03     2.89     2.91
Kentucky.............................       470,826       425,682      402,311       364,287       357,940      1.61     1.55     1.57     1.49     1.58
Louisiana............................     1,003,378       868,819      689,382       600.917       559,975      3.15     2.92     2.47     2.22     2.15
Maine................................        95,289        74,621       51,403        35,108        77,553      1.06     0.87     0.62     0.44     1.01
Maryland.............................       605,415       408,994      219,071       145,839       224,970      1.36     0.96     0.54     0.37     0.59
Massachusetts........................       527,273       184,933     (115,987)     (379,918)     (234,742)     0.70     0.26     0.00     0.00     0.00
Michigan.............................     1,497,688       866,906      364,530       (72,492)     (166,509)     1.45     0.90     0.42     0.00     0.00
Minnesota............................       459,621       369,776      257,584       224,091       309,473      0.94     0.80     0.59     0.54     0.80
Mississippi..........................       551,318       490,392      410,259       345,352       348,593      3.19     2.98     2.74     2.48     2.69
Missouri.............................       196,933       118,466       (7,749)        3,101       199,473      0.40     0.26     0.00     0.01     0.30
Montana..............................       122,242       110,910      104,415        96,370        91,119      2.08     1.95     1.91     1.87     1.91
Nebraska.............................       194,283       188,365      171,938       160,713       146,184      1.45     1.51     1.49     1.46     1.42
Nevada...............................       297,866       289,804      238,398       233,667       295,919      1.69     1.70     1.68     1.79     2.46
New Hampshire........................       250,884       211,580      164,455       129,582       127,995      2.25     2.06     1.71     1.38     1.46
New Jersey...........................     1,987,790     1,947,033    1,965,236     2,439,970     2,564,278      2.06     2.12     2.23     2.86     3.16
New Mexico...........................       354,874       317,264      271,194       238,999       220,932      3.25     3.13     2.91     2.77     2.73
New York.............................       248,978       190,467      129,409       213,914     1,191,450      0.12     0.10     0.07     0.12     0.69
North Carolina.......................     1,531,117     1,555,329    1,514,674     1,387,170     1,373,719      2.27     2.49     2.60     2.52     2.70
North Dakota.........................        57,415        58,641       56,267        50,306        50,914      1.41     1.55     1.59     1.51     1.64
Ohio.................................     1,600,533     1,166,837      845,054       602,464       647,410      1.46     1.13     0.88     0.65     0.74
Oklahoma.............................       521,683       474,866      437,800       418,907       426,398      2.32     2.21     2.13     2.10     2.24
Oregon...............................       905,985       994,533    1,096,695     1,054,524     1,043,810      3.21     3.86     4.63     4.71     4.98
Pennsylvania.........................     1,914,777     1,518,999    1,105,425       807,828     1,155,988      1.78     1.48     1.12     0.84     1.26
Puerto Rico..........................       634,291       674,663      730,873       749,255       750,020      6.71     7.54     8.39     9.05     9.64
Rhode Island.........................       110,086       119,262      119,294       104,498       143,617      1.33     1.51     1.56     1.41     2.03
South Carolina.......................       556,650       502,237      467,494       433,442       455,097      1.84     1.79     1.77     1.73     1.92
South Dakota.........................        51,622        51,208       49,773        50,416        49,701      1.09     1.16     1.23     1.34     1.45
Tennessee............................       822,821       747,477      672,261       603,130       612,653      1.66     1.62     1.58     1.50     1.67
Texas................................       584,866       480,322      445,633       586,472       942,734      0.34     0.30     0.30     0.41     0.69
Utah.................................       468,030       411,411      366,524       342,146       327,893      2.93     2.86     2.82     2.83     2.96
Vermont..............................       206,720       195,418      183,025       180,730       192,675      4.51     4.51     4.37     4.49     5.05
Virginia.............................       788,787       658,588      553,441       506,641       591,166      1.27     1.13     1.01     0.97     1.19
Virgin Islands.......................        40,064        40,843       51,575        47,416        43,241      6.86     6.67     6.60     7.32     7.31
Washington...........................     1,417,701     1,565,417    1,743,146     1,766,006     1,707,604      2.93     3.45     4.05     4.18     4.40
West Virginia........................       164,036       161,671      154,512       140,517       157,124      1.44     1.47     1.49     1.38     1.62
Wisconsin............................     1,503,641     1,400,119    1,241,918     1,194,553     1,171,822      3.06     3.03     2.87     2.90     3.07
Wyoming..............................       142,310       136,755      127,332       109,826        98,952      4.22     4.15     4.08     3.71     3.48
                                      ------------------------------------------------------------------------------------------------------------------
      Total..........................    35,403,296    31,343,551   28,187,816    27,111,772    31,494,605      1.40     1.32     1.25     1,25     1.49
--------------------------------------------------------------------------------------------------------------------------------------------------------
Difference between detail and totals due to rounding 1995 data subject to revision. Ratio of reserves to wages not calculated for States with negative
  balances.
 
Source: U.S. Department of Labor. Prepared by the National Foundation for U.C. & W.C., June 1997.


                                 FINANCIAL INFORMATION BY STATE FOR CY96.4, 1996
----------------------------------------------------------------------------------------------------------------
                                                  Revenue (12                                 Total      Loans/
                     State                         mos) (in     TF Balance (in   Mos. in    loans (in     cov.
                                                  thousands)      thousands)        TF     thousands)   employee
----------------------------------------------------------------------------------------------------------------
United States.................................     $23,009,990     $38,631,922       21.3          $0      $0.00
                                               -----------------------------------------------------------------

[[Page S6407]]

 
Alabama.......................................         134,029         483,472       27.3           0       0.00
Alaska........................................         109,089         194,188       19.8           0       0.00
Arizona.......................................         223,143         627,059       46.3           0       0.00
Arkansas......................................         169,670         202,784       13.0           0       0.00
California....................................       3,590,823       2,877,452       11.7           0       0.00
Colorado......................................         187,897         510,956       32.5           0       0.00
Connecticut...................................         592,538         277,861        7.4           0       0.00
Delaware......................................          68,409         258,468       31.9           0       0.00
Dist. of Colum................................         133,380          99,368       12.2           0       0.00
Florida.......................................         677,796       1,947,557       35.2           0       0.00
Georgia.......................................         382,294       1,634,073       67.0           0       0.00
Hawaii........................................         179,540         211,267       13.3           0       0.00
Idaho.........................................         105,900         266,228       32.1           0       0.00
Illinois......................................       1,199,050       1,638,560       15.2           0       0.00
Indiana.......................................         238,343       1,273,086       58.0           0       0.00
Iowa..........................................         133,905         718,845       45.9           0       0.00
Kansas........................................          42,487         651,074       52.6           0       0.00
Kentucky......................................         234,997         501,304       25.7           0       0.00
Louisana......................................         204,469       1,131,052       94.7           0       0.00
Maine.........................................         122,601         112,122       12.5           0       0.00
Maryland......................................         421,722         690,786       22.9           0       0.00
Massachusetts.................................       1,130,136         914,631       14.0           0       0.00
Michigan......................................       1,233,803       1,830,928       21.8           0       0.00
Minnesota.....................................         386,523         513,033       16.4           0       0.00
Mississippi...................................          99,520         553,222       50.0           0       0.00
Missouri......................................         381,576         307,507       12.8           0       0.00
Montana.......................................          58,841         125,900       24.9           0       0.00
Nebraska......................................          41,748         195,210       44.8           0       0.00
Nevada........................................         177,064         348,278       28.6           0       0.00
New Hampshire.................................          41,781         268,011       91.7           0       0.00
New Jersey....................................       1,448,896       2,028,818       18.1           0       0.00
New Mexico....................................          85,729         385,531       59.6           0       0.00
New York......................................       2,211,440         470,400        2.8           0       0.00
North Carolina................................         113,075       1,335,565       39.6           0       0.00
North Dakota..................................          24,364          50,072       19.1           0       0.00
Ohio..........................................         781,640       1,750,968       28.8           0       0.00
Oklahoma......................................         128,728         563,895       64.3           0       0.00
Oregon........................................         384,046         941,419       28.9           0       0.00
Pennsylvania..................................       1,612,406       2,031,947       14.9           0       0.00
Puerto Rico...................................         149,262         595,703       31.8           0       0.00
Rhode Island..................................         184,004         116,240        7.4           0       0.00
South Carolina................................         208,829         603,410       36.2           0       0.00
South Dakota..................................          12,291          49,542       39.9           0       0.00
Tennessee.....................................         284,220         826,526       30.8           0       0.00
Texas.........................................       1,014,460         642,233        7.7           0       0.00
Utah..........................................          96,262         523,880       89.2           0       0.00
Vermont.......................................          48,595         218,259       49.5           0       0.00
Virginia......................................         260,890         897,198       55.4           0       0.00
Virgin Islands................................           9,345          42,069       51.5           0       0.00
Washington....................................         644,606       1,332,508       19.7           0       0.00
West Virginia.................................         130,182         157,345       12.8           0       0.00
Wisconsin.....................................         445,248       1,556,922       37.2           0       0.00
Wyoming.......................................          28,401         147,087       54.0           0       0.00
----------------------------------------------------------------------------------------------------------------


              FINANCIAL INFORMATION BY STATE FOR CYQ, 1997
------------------------------------------------------------------------
                                      Revenues,                  TF as
                                       last 12     TF balance   percent
               State                  months (in      (in       of total
                                      thousands)   thousands)  wages \1\
------------------------------------------------------------------------
Alabama............................     $140,978     $451,425       1.21
Alaska.............................      131,645      202,416       3.46
Arizona............................      224,651      741,050       1.70
Arkansas...........................      183,101      204,319       1.03
California.........................    3,367,845    3,737,815       1.05
Colorado...........................      198,748      574,413       1.22
Connecticut........................      637,125      532,692       1.06
Delaware...........................       75,692      279,173       2.86
District of Col....................      132,481      135,627       0.94
Florida............................      685,668    2,090,222       1.55
Georgia............................      350,964    1,797,102       2.13
Hawaii.............................      186,510      216,658       2.04
Idaho..............................       99,412      280,382       3.00
Illinois...........................    1,226,328    1,742,968       1.16
Indiana............................      268,016    1,362,463       2.15
Iowa...............................      144,156      727,327       2.79
Kansas.............................       46,633      606,735       2.16
Kentucky...........................      269,075      571,366       1.71
Louisiana..........................      213,963    1,275,668       3.55
Maine..............................      118,089      136,019       1.35
Maryland...........................      349,967      720,552       1.42
Massachusetts......................    1,222,144    1,446,164       1.64
Michigan...........................    1,184,719    2,222,714       1.93
Minnesota..........................      398,707      564,628       0.98
Mississippi........................      166,992      563,901       2.95
Missouri...........................      381,802      417,706       0.75
Montana............................       65,306      135,604       2.11
Nebraska...........................       57,932      205,727       1.33
Nevada.............................      224,837      387,888       1.79
New Hampshire......................       26,426      278,296       2.16
New Jersey.........................    1,459,837    2,384,916       2.21
New Mexico.........................       99,244      431,159       3.61
New York...........................    2,402,806      990,176       0.43
North Carolina.....................      253,942    1,301,184       1.67
North Dakota.......................       26,246       38,057       0.83
Ohio...............................      719,622    1,874,943       1.53
Oklahoma...........................      107,585      608,942       2.36
Oregon.............................      462,961    1,068,843       3.13
Pennsylvania.......................    1,587,542    2,253,703       1.87
Puerto Rico........................      203,816      586,659       5.30
Rhode Island.......................      248,423      160,044       1.78
South Carolina.....................      219,733      687,060       2.02
South Dakota.......................       14,186       48,939       0.91
Tennessee..........................      296,749      847,842       1.52
Texas..............................    1,014,596      706,577       0.35
Utah...............................       97,876      572,849       2.97
Vermont............................       50,047      233,537       4.59
Virgin Islands.....................        7,693       45,434       6.82
Virginia...........................      222,448      979,376       1.35
Washington.........................      810,440    1,447,195       2.42
West Virginia......................      139,030      165,917       1.37
Wisconsin..........................      475,595    1,632,214       2.95
Wyoming............................       31,217      158,573       4.26
                                    ------------------------------------
United States......................   23,731,544   43,833,157       1.51
------------------------------------------------------------------------
\1\ Based on estimatd wages for the most recent 12 months.

                                 ______