The US Congress
has wisely and fairly raised the annual Social Security Wage Maximum for inflation.
What this has
done is to fairly build up the Social Security Trust Fund. If this Wage Maximum, which is $113,700 in
2013, had not been wisely adjusted for annual inflation, there would presently be
a substantial deficit in the Social Security Trust Fund.
After all, here is the Social Security annual wage limit for different
historical years:
1950…..$3,000
1976,,,,$15,300
2000…$76,200
2012..$110,100
So, certainly the
Federal Unemployment Wage Limit has also likewise been adjusted annually
for inflation?
Well, guess what,
it hasn’t at all….not even inflation for one year.
The Federal
Unemployment Tax Act was passed in 1976 (37 years ago), when the Social Security
Annual Wage Limit was only $15,300.
Thus, the 2013 Social Security Wage Limit of $113,700 in 2013 is more
than seven times such Wage Limit in 1976, when the Federal Unemployment Tax Act
was passed.
But yet the
Federal Unemployment Wage Limit in 2013 of the first $7,000 of each employee's wages is precisely
identical with that of 1976. Go figure!
With such
incredible US Government lack of foresight, it only makes sense that Government
Unemployment Compensation Funds will run out during recessions and especially in all years during and after the
financial meltdown in 2008. And high US unemployment will
continue pretty much unabated with no end in sight, due to the US House changing to Republican control in 2011, with the result being that the US Congress has continually refused to enact any significant
US job creation stimulation.....thus the present 9% approval rating of the US Congress.
This is clearly
a massive tax loophole where US businesses haven’t had to
increase their Federal Unemployment Annual Wage Limit for inflation. Thus, they have paid substantially less in annual
Federal Unemployment Tax than they should have.
So how to close
this clearly abusive tax loophole?
Well, it wouldn’t
be wise to catch up the Wage Limit for all of the inflation since 1976 now. That would increase the 2013
Federal Unemployment Taxes Paid by Employers by more than 7 times.
I think a reasonable
way to deal with this massive employer tax loophole is to increase the 2013 Federal Unemployment Wage Limit for
each employee from $7,000 to $10,000 for all large employers with 2012 Total
Revenues above say $1 bil, and from $7,000 to $9,000 for all large employers
with 2012 Total Revenues from say $500 mil to $1 bil, and from $7,000 to $8,000 for all
large employers with 2012 Total Revenues from say $250 mi to $500 mil. And then for employers of all sizes, the Annual
Wage Limit should be adjusted each year for inflation, starting in 2014.
In doing so, you
should also be able to avoid the annual messy negotiations on extending Unemployment
Compensation Benefits.
All of the
substantial amount of money raised here should be used to reduce the US Debt.
