Madam Chairman, Members of the Committee, thank you for the opportunity to testify before you today. The views I express in this testimony are my own and should not be construed as representing any official position of The Heritage Foundation.
As the 106th Congress begins its debate over the Unemployment Compensation (UC) system, Members should consider three important principles to ensure that both workers and employers receive the greatest benefit from any reform.
Ending the FUTA surtax would reduce the overtaxation of American jobs and allow workers and employers to keep $8.3 billion more of their hard-earned money over the next five years to spend or invest as they see fit.
In 1996, Congress passed welfare reform that provided states with greater flexibility while holding them accountable for reducing welfare caseloads. In 1998, Congress passed the Workforce Investment Act that created one-stop career centers and gave the states greater responsibility for job training and employment service programs while demanding more effective results. Congress should now do the same for the unemployment compensation system, and a positive step in that direction is contained H.R. 3174, the Employment Security Financing Act of 1999.
H.R. 3174 would:
Provide states with sufficient funding to deliver UC services and maintain program integrity.
Reduce the length of unemployment for many unemployment claimants. With better capacity to provide job search assistance, the Employment Security system will help more claimants return to work sooner.
Reduce employer tax and paperwork burdens. Employers will no longer pay the temporary FUTA surtax, and they will only have to deal with one tax collection agency -- the state, not the IRS.
- And eliminate burdensome federal mandates that cause inefficiencies and impose increased costs.
If Congress follows these three principles and recommendations, Members would strengthen and improve the UC system while reducing the record high tax burden on American jobs. Thank you for your time, and I will be happy to answer any questions you may have.
D. Mark Wilson is a former Research Fellow of The Heritage Foundation.