Slight Decrease In Nevada Unemployment Taxes

The average tax rate employers are charged to fund Nevada's unemployment insurance program was cut slightly on Friday from 1.38 percent to 1.33 percent of an employee's wages in 2008.

Cindy Jones, administrator for the state Employment Security Division, set the rate based on a recommendation from the Employment Security Council, made up of employers, employees and labor interests.

Jones has termed the move a small step to help stimulate Nevada's slowing economy.

The cut should save employers about $12 million a year.

She said the unemployment insurance system was set up to collect higher taxes in good economic times and lower taxes when the economy isn't performing as well.

The revenue generated by the tax goes into a trust fund that's used to pay jobless benefits to laid-off workers.

This year, the fund covered about 1.1 million workers.

The fund had $803.1 million as of Sept. 30, about $256 million above a required minimum "solvency" level.

With the 1.33 percent rate in place, the fund should climb to about $868 million by September 2008.

At that point, the fund would be $302.5 million above the solvency level.

Rates paid by employers range from 0.25 percent to 5.4 percent.

New employers pay 2.95 percent for up to four years until they get
an experience rating that determines whether their rates go up or down.

In 2008, the rate will apply to the first $25,400 in employee wages.

Nearly half of the state's employers pay the lowest rate.

The highest taxpayers typically include construction companies and
others with high worker turnover rates.

Employers pay the entire tax, and nothing is deducted from employee wages.

The council made its recommendation to drop the rate, which has been 1.38 percent for the last three years, after reviewing economic projections and predicted unemployment reports.

Nevada's seasonally adjusted unemployment rate hit 5.2 percent in October, and state economists say a drop in home construction has caused the entire Nevada economy to decline.