The South Carolina Department of Employment and Workforce (SCDEW) administers the South Carolina unemployment benefit program for state residents, and which is funded by a state-wide unemployment tax on employee wages. Employers are responsible for the payment of this tax.
SCDEW, and its predecessor agency, the South Carolina Employment Commission Security Commission, have had financial difficulties raising sufficient unemployment taxes to be able to pay unemployment benefits to South Carolina workers. The financial problems became so significant that SCDEW became insolvent through the Recession and was required to receive a $1 billion bail-out loan from the federal government. SCDEW had to increase South Carolina unemployment taxes on businesses in the state to pay-off the loan.
The South Carolina economy has grown since the Recession, and South Carolina employment taxes also grew as a result. These increased tax revenues for SCDEW has allowed the agency to pay-off the federal loan and to also now work towards establishing a surplus/reserve to pay unemployment claims.
SCDEW recently announced a major South Carolina unemployment tax cut for South Carolina employers. This tax cut will go into effect shortly beginning January 1, 2020. SCDEW estimates that South Carolina employers will pay an average of 34% less in state unemployment taxes now. A special and added tax, the SCDEW “insolvency surcharge” has been eliminated.
A tax cut is always welcome. A tax cut for employers – particularly of this magnitude – is exceptional. Employees and workers fuel our economy, and lessening the tax burdens of employers will allow employers to hire and pay more. The State of South Carolina should be congratulated.
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