[Congressional Record (Bound Edition), Volume 150 (2004), Part 13]
[Senate]
[Page 17198]
[From the U.S. Government Publishing Office, www.gpo.gov]




           AMENDING TITLES III AND IV OF SOCIAL SECURITY ACT

  Mr. FRIST. Mr. President, I ask unanimous consent that the Senate 
proceed to the consideration of H.R. 3463, which is at the desk.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (H.R. 3463) to amend titles III and IV of the Social 
     Security Act to improve the administration of unemployment 
     taxes and benefits.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. NICKLES. Mr. President, I rise in support of H.R. 3463, the SUTA 
Dumping Prevention Act of 2003. This bill cleared the House on July 14 
by voice vote, and was held at the desk in the Senate to facilitate its 
quick passage. On July 15, I introduced a companion bill with Senator 
Kennedy, S. 2662, and it is cosponsored by Senators Grassley, Baucus, 
Ensign, Levin, Gregg and Murray.
  SUTA stands for State Unemployment Tax Avoidance. This bill addresses 
employers who have lowered their State unemployment tax rate by 
changing their ``experience rating.'' Experience rating is used to 
determine an employer's unemployment tax rate. It means that companies 
who have laid off more workers are required to pay more in State 
unemployment taxes, and companies that have had fewer layoffs pay less. 
Experience rating provides several incentives for employers, including 
encouraging employers to maintain a stable workforce, and an incentive 
to contest claims when employees quit or are fired for cause.
  This legislation cracks down on employers who intentionally avoid 
paying their fair share of State unemployment taxes. It prohibits 
shifting employees into shell companies with the sole purpose being to 
avoid paying the proper amount in unemployment taxes by changing their 
experience rating. H.R. 3463 ends this abusive practice by requiring 
States to deter tax rate manipulation and prevent SUTA dumping by 
requiring that tax rate-related unemployment experience be transferred 
with a business once it is transferred to another employer. It also 
imposes penalties when the law is violated.
  SUTA dumping was first exposed in December 2002 by the Labor 
Department's Employment and Training Administration. Since then several 
States have enacted SUTA dumping legislation, including Arkansas, 
Maine, North Carolina and Washington. Though according to the General 
Accounting Office, three-fifths of State unemployment administrators 
indicated their State law is unable to combat the problem.
  H.R. 3463 also includes language to make sure unemployment insurance 
payments are not fraudulently paid to people who have returned to work. 
The legislation includes a new hire database provision that authorizes 
States to access nationwide work history information to ensure that 
workers on a payroll are not also collecting an unemployment check.
  The Congressional Budget Office estimates that H.R. 3463 will 
decrease the Federal deficit by $499 million over 5 years and $510 
million over 10 years. The savings result from increased collections 
from employers who are currently engaging in SUTA dumping, and 
additional savings from eliminating fraudulent unemployment insurance 
payments to employed workers. The SUTA dumping provision will reduce 
the Federal deficit by $429 million over 10 years, and the new hire 
database provision by $81 million over 10 years.
  These revenues will be added to unemployment trust funds, which 
include triggers that lower unemployment tax rates as trust fund 
balances rise. Enactment of H.R. 3463 promotes fairness and will lead 
to reduced tax rates for employers who are today overtaxed.
  Mr. FRIST. I ask unanimous consent that the bill be read a third time 
and passed, the motion to reconsider be laid upon the table, and that 
any statements relating to the bill be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (H.R. 3463) was read the third time and passed.

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