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FOR IMMEDIATE RELEASE: August 16, 2011

SCHUMER LAUNCHES FIGHT TO END JOB-KILLING TAX NOW REQUIRED ON SYRACUSE SMALL BUSINESSES TO PAY INTEREST FOR STATE’S UNEMPLOYMENT FUND; CONGRESS FAILED TO EXTEND INTEREST FREE UNEMPLOYMENT INSURANCE LOANS DURING DEBT FIGHT


At A Time When We Can Least Afford It, NYS Must Charge Businesses Like Bitzer Scroll Up to Over $20 for Every Employee

Schumer Will Introduce Legislation to Retroactively Extend Interest Free Loan Provisions to Refund Payments and Save New York Businesses from Job-Killing Taxes

Schumer: Large Burden on Small Business Comes at Wrong Time

 

Today, U.S. Senator Charles E. Schumer announced a major effort to end a tax that small businesses would be required to pay to replenish the New York State Unemployment Insurance Fund, after Congress failed to include an extension of interest-free loans to state unemployment insurance funds in the debt ceiling compromise negotiated two weeks ago. As part of the American Recovery and Reinvestment Act, states were permitted to borrow money, interest free, from the Federal Unemployment Trust Fund (FUTF) through 2011, to help finance the state’s increasing unemployment burden during the recession. New York State borrowed $3 billion to pay for their unemployment programs, but because Congress didn’t extend the interest-free provision, New York State now owes the federal government $95 million in interest that is being passed on to small-businesses like Bitzer Scroll in the form of a surcharge that could equal more than $20 per employee. Schumer is pushing legislation to retroactively extend the interest-free lending program from the FUTF, refunding fees already paid by local businesses and ending the tax. 

“At a time when we need to be doing everything we can to help our businesses like Bitzer Scroll create and retain jobs, this tax is an anchor that will only drag us down,” said Schumer. “We need to free small business owners from the shackles of this fee and instead help them invest in their business to create new jobs. This is a whopping $95 million that should go to hiring more workers and reinvesting in businesses to help them grow. That’s one way to get our economy back on track.”

“Our Syracuse Bitzer Scroll operation touts a growing number of employees and a sophisticated production process that puts high quality products into our customers’ hands,” said Mike McKee, General Manager of Bitzer Scroll. “However, like many New York companies, Bitzer Scroll has been hit with a tax bill that’s added up to $1,307 for us. That’s money we could use for supplies, employee training, anything rather than another bill. Senator Schumer’s efforts to get our money back represent a clear understanding of small business and a drive to keep it growing.”    

This week, employers across New York were forced to pay a surcharge for each employee on the payroll in order to help the state cover its obligations in unemployment insurance.  The surcharge can be as high as $21.25 per employee with the state average at approximately $18 according to the Labor Department. The state levied the surcharge to come up with the $95 million interest payment, due September 30th, that the federal government required after the interest-free lending program from the federal unemployment fund expired.

After the economic crisis that began in 2008, states across the country were forced to borrow money from the federal government after their own tax revenue dropped and the number of individuals receiving unemployment insurance skyrocketed. Schumer’s legislation would retroactively reinstate interest free borrowing for states to help them cover their unemployment insurance obligations, and require that New York State refund the surcharge payments for small businesses that have already paid the fee.

Schumer was joined by Bitzer Scroll General Manager Mike McKee and Bitzer Scroll employees, as well as Karyn Burns from the Manufacturer’s Association of Central New York and Centerstate CEO representatives to announce his new legislation that would return $95 million in unemployment tax payments to businesses across New York. Bitzer Scroll, a global company with over 2,600 employees and 79 full-time Syracuse workers, touts 70% domestic content in all of its manufactured goods. The company, which manufactures refrigeration and HVAC compressing components, increased employment levels by roughly 20% in 2011 and hopes to continue its local growth.     

The Schumer bill would extend interest-free borrowing through 2012, and waive the interest payments from 2011, thus relieving New York small businesses of a $95 million tax. By requiring states to refund the money, Schumer’s legislation would guarantee that small businesses are the ultimate savers, and would see a full refund of their surcharge payment.

“This week, small business owners are licking stamps to mail in checks to pay this painful tax, and it’s leaving a bad taste in their mouth,” continued Schumer. “This bill would put $95 million back where it belongs – in the accounts of small business owners who can hire new workers and drive our economic recovery.”

 

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