Nevada ponders tax hike to boost unemployment insurance fund

LAS VEGAS, NV (KTNV) — Small business owners who suffered through the pandemic might have to help the state cover its unemployment expenses.

As 13 Investigates reported earlier this week Nevada took out a loan to cover unemployment benefits. Most of it has been paid back, but now small businesses might get hit with a higher tax anyway.

State officials say it needs more money to pay for unemployment benefits in the future. Those dollars may come from coffee shops, car dealers and other small businesses — employers still struggling to rebuild amid a pandemic that nearly wiped them out.

“In a time when we are paying higher wages, higher costs, we can’t get people to work, and we don’t have good sales to support it, it’s just the wrong time to increase taxes on small business,” says Randi Thompson with the Nevada chapter of the Federation of Independent Business.

Thompson is one of many who spoke in a Friday morning Zoom workshop held by the state unemployment department.

“A rate hike at this point, our belief is that it sends a very clear message that Nevada is not business-friendly for entrepreneurs and new business owners at a time when our state sorely needs innovation, diversity, and workforce development,” says Amber Stidham with the Henderson Chamber of Commerce.

The proposed tax rate would go from 1.65 to 1.85%. That’s a maximum increase of $73 per employee. It would contribute $628.73 million to the trust fund in 2022. $219.24 million of that would come from small businesses.

Opponents say there’s an alternative: federal money from the American Rescue Plan.

“They used $332 million to pay off the debt, which is great,” says Thompson. “Places like Arizona committed $775 million dollars, New Mexico committed $660 million dollars to get their fund balance back up.”

Business groups argue economic conditions are still too uncertain due to the COVID Delta variant, problems with the labor market and supply chain issues.

“The state shut us down. We didn’t shut ourselves down,” says Thompson. “So, the state needs to come up with a better idea of how to pay this back. And they have the funds to do so.”

DETR was also called out for not disclosing how much money was paid out in fraudulent claims, which significantly depleted the trust fund’s balance.

“If you’re asking hard-working, law-abiding business owners to cover the funds for fraudulently spent dollars, that is really unfair,” says Thompson.

And at a time when employers can least afford another hit. The Henderson Chamber of Commerce wrapped up its comments with a simple plea. “To not further burden our mom and pop’s, our local restaurants,” says Stidham. “Now is not the time to make Nevada a more expensive place for job creators to do business.”

DETR points out that the state did not charge employers for six quarters for their UI tax, and did not charge their experience rating.

The agency said there are many reasons for the relief of charges, however, “the heart of the matter is the tremendous level of unemployment insurance fraud faced by Nevada and the nation. DETR is doing everything in its ability to ensure employers and businesses are not held accountable for bad actors submitting imposter claims using stolen identities.”

The state will make a final decision during a regulation hearing in early December. If they decide to impose a tax increase, it will take effect in 2022.