Nevada casinos have been thriving in much of 2021, as Americans are finally allowed to travel freely. Nevertheless, most have called for Las Vegas to loosen its restricted demand for entertainment.
Business has been good. Gross Gaming Revenue (GGR) has surpassed the $1 billion mark in each of the last six months. However, some business owners claim a pending decision in the Carson capital continues to slow the recovery.
The Nevada Employment Security Council has proposed increasing the state’s unemployment insurance tax. The tax increase is part of an effort to top up the state’s fund that distributed unemployment compensation to Nevadans who were put out of work during the COVID-19 pandemic.
Last Friday, Nevada’s Employment Security Division and Employment Department, Training, and Rehabilitation jointly held a virtual public sitting concerning the proposed unemployment insurance (UI) tax rise. Most business and community leaders did not support the rate increase.
Tax increase too soon
Nevada was one of the most hit states by the pandemic since its economy depends greatly on tourism and business travel. The state continues to lead the nation in unemployment, with about 7.5% of Nevadans out of work in September.
Although that is down from 8% in April of this year, it stands considerably higher than the national average, 4.8%.
However, some business leaders believe hiking the UI tax on employers now is too soon.
“We are still facing challenges ahead of us as a state because of the pandemic. Passing a tax increase at this time sends the wrong message to Nevada’s employers, who have struggled to keep their doors open and maintain employees,”
proclaimed Gina Bongiovi, the Vegas Chamber chair.
The Nevada Employment Security Council has proposed increasing the UI tax from 1.65% in 2021 to 2.0% in 2022. The Vegas Chamber claims the difference would cost employers as much as $130 per worker in 2022.
According to the US Bureau of Labor Statistics report, Nevada’s leisure and hospitality industries hired approximately 277,200 individuals as of September.
“Now is not the time to increase taxes on employers, tiny businesses. This tax increase would apply to all businesses in Nevada that are required to pay the UI tax. There is no small business exemption,”
a Vegas Camber statement proclaimed.
The commerce release continued,
“The COVID-19 pandemic is still creating challenges for many businesses, such as increased supply costs, delay of materials and products, labor shortages, and evolving health guidelines. Additionally, the impact of the Delta Variant is causing uncertainty that is slowing economic recovery.”
Nevada has been funding its unemployment demand with federal incentive money generated through the CARES Act. The Nevada Employment Security Division must notify employers concerning the UI tax rate before January 1, 2022.
UI tax rates
States differ in deciding how to impose an unemployment tax rate on employees. The actual rate for new employers ranges from as low as 0.55% in South Carolina to as high as 3.689% in Pennsylvania.
Most states, including Nevada, provide a discounted UI rate for businesses that have long hired employees and have paid considerably into the state system. Discounts for sectors far less susceptible to great UI demands are also available in Nevada.
However, the tourism sector does not fall into that category, and that is why some feel a higher UI tax is guaranteed while economic conditions are seemingly improving.
“If we get into trouble with inflation or another downturn or another whatever type of situation…it is better to hedge forward that wind up trying to buy our way out again,”
Ray Bacon, official director of the Nevada Manufacturers Association, opined.
The state running out of unemployment funds could affect businesses in the future since they will likely be on the hook to help repay the federal loans.
Last Updated on by Ryan