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1 Proposed Revisions in Unemployment Compensation and Taxes 1 (1965)

handle is hein.tera/prevunco0001 and id is 1 raw text is: SPECIAL REPORT 1965 - 5 PROPOSED REVISIONS IN UNEMPLOYMENT COMPENSATION AND TAXES A Background Information Report Proposals for substantial changes in the Federal-State unemployment insurance system have been advanced by President Johnson and will be the subject of hearings before the House Committee on Ways and Means, beginning August 9. The Administration will then, presumably, pre- sent more evidence on its reasons for urging such extensive changes, explain the many details, and supply estimates of costs and other effects. Until such information is available, no complete analysis of the probable effects of these proposals can be made. The following sec- tions summarize the major proposals and indicate some of the ques- tions they raise. Basic New Proposals The following major changes are proposed: 1. New provisions would add 26 weeks of Federal unemployment bene- fits for unemployed who have used up all benefit claims (26 weeks being the longest allowed under present state systems). The addi- tional benefits would take effect on July 1, 1966. 2. The tax rate on employers would rise from 3.1 percent to 3.25 percent on covered wages. Additional financing equal to the 0.15 percentage point tax increase would come from Federal general reve- nue to pay for the extension of benefits under the new Federal program.1/ 3. The annual taxable wage base would be raised from $3,000 to $5,600 for the calendar years 1967 through 1970, and to $6,600 thereafter. 4. Coverage would be extended to such presently uncovered (or par- tially uncovered) groups as most employees of nonprofit organizations, 1/ The new Federal unemployment adjustment benefits would be financed from a separate account. When this account reaches a level esti- mated as adequate to assure payment of extended benefits and matching benefit grants in a year of heavy unemployment, then both the tax rate increase on employers and the Federal general reve- nue contributions would be reduced from 0.15 to 0.10 percent.

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