THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Tuesday, January 7, 1997 TAG: 9701070237
SECTION: BUSINESS PAGE: D6 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: 44 lines
Virginia businesses should get a $100 million tax cut because the state's unemployment insurance trust fund has grown too large, two groups that support limited government said Monday.
According to a study by the Virginia Institute for Public Policy and the Southeastern Legal Foundation, the trust fund has a balance of more than $852 million. That is enough to pay unemployment benefits at current rates for four years with no additional revenue being collected.
The fund is maintained by a tax on employers that can vary from 0.1 percent to 6.2 percent of the first $8,000 of each employee's income.
The institute wants the General Assembly to slow the rate of growth of the fund by passing a one-time, $100 million tax cut. Under the proposal, employers would reduce the tax they pay by 40 percent for one year.
``Last year, the trust fund grew by $107 million in excess of what was needed to pay benefits to the unemployed,'' said John Taylor, president of the Virginia Institute for Public Policy. ``Our proposal will not deplete the fund, but it will keep it from growing from year to year.''
Taylor said that the money now in the trust fund is invested in U.S. Treasury bills.
Four state senators joined Taylor at a news conference announcing the proposal: Charles J. Colgan, D-Prince William; Stephen H. Martin, R-Chesterfield; Jackson E. Reasor Jr., D-Tazewell; and Walter A. Stosch, R-Henrico.
``I'm certainly in favor of analyzing it and if it is overfunded, then providing tax cuts to employers,'' said Stosch. He added that it was still too early to tell how large a cut, if any, employers should receive.
Unions said they would oppose any reduction in the level of contributions because it could hurt workers now receiving unemployment benefits.
``Any reduction in the amount of money in the fund is going to hinder any attempts in the future to raise benefit levels,'' said Jim Leaman, secretary-treasurer of the state AFL-CIO.
The institute is based in Sterling and studies education and downsizing of government. The Southeastern Legal Foundation is an Atlanta-based public interest law firm that supports limited government and free enterprise.