Hawaii’s 2007 Tax Cut Turned Into a 600 Percent Increase in 2010
In 2007, under the stewardship of Republican Gov. Linda Lingle, Hawaii reduced the unemployment tax rate on employers under the guise of encouraging job growth — despite the fact that, at the time, Hawaii’s unemployment rate was 3.1 percent.
Now that the unemployment rate is 6.9 percent, and people are applying for unemployment benefits at a record pace, Hawaii has a problem: a state law that triggers an automatic tax increase to cover shortfalls in the unemployment system. And whatever money Hawaii’s employers saved during the boom employment times, they’re about to have to repay in spades. The per-employee tax to fund unemployment benefits will go from $90 to $1,070 per worker this year — absent legislative intervention — to cover systemic shortfalls.
Lingle is now calling for lawmakers to limit the per-employee tax increase to 60 percent, a $54-per-employee increase. Does anyone think that employers saved enough on the tax cut from 2007 to 2009 to make up for the current need for a massive increase?
But don’t hold your breathe waiting for Republicans to start screaming about how massive tax reductions led to larger deficits in the end. These days, only spending can lead to deficits.