Niagara Leader

Congresswoman Claudia Tenney of New York's 24th district, in collaboration with Congressman Lloyd Smucker from Pennsylvania's 11th district, has introduced a new bill aimed at protecting small businesses from increased unemployment taxes. The legislation, named the Protecting Small Businesses from Imposed Tax Hikes Act, seeks to prevent further tax hikes for small businesses in states that have not repaid their federal Unemployment Insurance (UI) loans.

Under the Federal Unemployment Tax Act (FUTA), employers face a 6.0 percent gross federal unemployment tax rate on the first $7,000 paid annually to each employee. This results in a maximum federal tax of $420 per employee per year. Employers can typically credit up to 5.4 percentage points of state unemployment taxes against this rate, reducing the typical FUTA tax to $42 per worker annually. However, if a state's unemployment insurance funds have outstanding federal advances for two or more consecutive years, like New York's case, employers may see their FUTA credit reduced by an additional 0.3 percent for each year the balance remains unpaid.

"New York is one of only two states carrying outstanding loans from the unemployment insurance trust fund," said Congresswoman Tenney. She criticized Governor Hochul's handling of the situation: "Due to Governor Hochul's inaction and financial mismanagement, the burden of repaying these federal UI loans will fall heavily on our state's small businesses." Tenney emphasized her personal connection as a former small business owner and argued that "small businesses should not be further penalized because of Governor Hochul's irresponsibility."

Congressman Smucker echoed these sentiments: “Small businesses should not be on the hook to pay for the failures of their state policymakers.” He added that states should manage their own debts without shifting responsibilities onto small businesses and expressed gratitude towards Rep. Tenney for her efforts in supporting America's economic backbone—small businesses.