If you've been self-employed, you are familiar with the time-tested axiom: "Always put some money aside for a rainy day." Unfortunately, politicians sustain their business by giving away as many tax dollars as possible to those who can best influence re-election. This ass-backwards business model has now come back to haunt states which got drunk on giveaways during the boom.
CNNMoney reports that one of the greediest and least thoughtful states was Hawaii:
In Hawaii, taxes automatically increased from an average of $90 per worker in 2009 to $1,070 this year. Part of the problem stems from the fact that the state was generous to businesses during prosperous times. In fact, lawmakers lowered the tax rate in 2007, when unemployment did not exceed 3.1%. The state's jobless rate now stands at 6.9%.
Although some media outlets will spin the tax hikes as another example of Big Government reigning supreme, they are 100% wrong. Almost every state which raises unemployment taxes is the victim of their own reckless and irresponsible planning.
Everyone knows businesses ebb and flow in cycles. To reduce unemployment taxes during boom times is an act of transcendental ignorance and greed. Moreover, it's a lapse in fiscal discipline. Drivers are required to have car insurance because accidents are inevitable. The same foresight must be used when preparing for inevitable recessions.
Of course the tax hike will take a bite out of business profits or growth like a scene from the movie Twilight. However, so does every necessity if you prefer to deal with it when the rain arrives.
Unfortunately, if you think unemployment tax increases suck, this episode is merely a foreshadow of what shall unfold when Social Security and Medicare tanks approach empty.
Are you fed up with irresponsible government spending? Are you worried this is the tip of the tax hike iceberg? Be heard and share your thoughts in our comment section below ...
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