 | This article needs additional citations for verification .(June 2018) (Learn how and when to remove this template message) |
| This article is part of a series on |
| Taxation in the United States of America |
|---|
 |
 |
Taxes under State Unemployment Tax Act (or SUTA) are those designed to finance the cost of state unemployment insurance benefits in the United States, which make up all of unemployment insurance expenditures in normal times, and the majority of unemployment insurance expenditures during downturns, with the remainder paid in part by the federal government for "emergency" benefit extensions.
Unemployment benefits are payments made by back authorized bodies to unemployed people. In the United States, benefits are funded by a compulsory governmental insurance system, not taxes on individual citizens. Depending on the jurisdiction and the status of the person, those sums may be small, covering only basic needs, or may compensate the lost time proportionally to the previous earned salary.
The United States of America (USA), commonly known as the United States or America, is a country composed of 50 states, a federal district, five major self-governing territories, and various possessions. At 3.8 million square miles, the United States is the world's third or fourth largest country by total area and is slightly smaller than the entire continent of Europe's 3.9 million square miles. With a population of over 327 million people, the U.S. is the third most populous country. The capital is Washington, D.C., and the largest city by population is New York. Forty-eight states and the capital's federal district are contiguous in North America between Canada and Mexico. The State of Alaska is in the northwest corner of North America, bordered by Canada to the east and across the Bering Strait from Russia to the west. The State of Hawaii is an archipelago in the mid-Pacific Ocean. The U.S. territories are scattered about the Pacific Ocean and the Caribbean Sea, stretching across nine official time zones. The extremely diverse geography, climate, and wildlife of the United States make it one of the world's 17 megadiverse countries.
In economics, a recession is a business cycle contraction when there is a general slowdown in economic activity. Macroeconomic indicators such as GDP, investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise. In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.
The tax is unique in two primary aspects. First, the tax is experience rated which means that tax rates are firm-specific and the rate a firm faces updates each year to reflect the cost of the benefits that firm's former employees have received recently. Because it is primarily firms in stress that generate layoffs, these tax increases target firms that are already under strain. For this reason, states limit how high they allow taxes to rise, but these limits vary by almost an order of magnitude from state to state.
A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent.
A layoff is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees for business reasons, such as personnel management or downsizing an organization. Originally, layoff referred exclusively to a temporary interruption in work, or employment but this has evolved to a permanent elimination of a position in both British and US English, requiring the addition of "temporary" to specify the original meaning of the word. A layoff is not to be confused with wrongful termination. Laid off workers or displaced workers are workers who have lost or left their jobs because their employer has closed or moved, there was insufficient work for them to do, or their position or shift was abolished. Downsizing in a company is defined to involve the reduction of employees in a workforce. Downsizing in companies became a popular practice in the 1980s and early 1990s as it was seen as a way to deliver better shareholder value as it helps to reduce the costs of employers. Indeed, recent research on downsizing in the U.S., UK, and Japan suggests that downsizing is being regarded by management as one of the preferred routes to help declining organizations, cutting unnecessary costs, and improve organizational performance. Usually a layoff occurs as a cost-cutting measure.
The second unique feature of UI taxes under SUTA is that the taxable base is ~$10,000 (on average, varies by state) per employee, much less than the average yearly earnings of a given worker. Because of this feature, firms pay a fixed "lump sum" tax per worker they employ. This provides a modest incentive for firms to reduce unskilled and part-time work in favor of skilled and full-time work.
One interesting feature of the UI tax is that it targets firms that have recently had layoffs, potentially hitting distressed firms. Recent work shows that UI tax increases significantly reduce hiring and employment in affected firms, potentially eroding the macroeconomics stabilizing influence of the UI program. [1]
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study aggregated indicators such as GDP, unemployment rates, national income, price indices, and the interrelations among the different sectors of the economy to better understand how the whole economy functions. They also develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, saving, investment, international trade, and international finance.
