A Schumer Classic

http://www.futureofcapitalism.com/2011/08/a-schumer-classic

"Schumer Launches Fight To End Job-Killing Tax" is the headline on a press release from the senior senator from New York, which couldn't help but grab my attention, since I'm always happy to see a Democratic leader denounce a job-killing tax.

The release explains:

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 30^th, that the federal government required after the interest-free lending program from the federal unemployment fund expired.

That may sound arcane, but as a New York-based employer, it's actually concrete: I received a notice about this and had to pay that $21.25.

What makes it a Schumer classic is, first, the senator's solution:

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.

Got that? Mr. Schumer wants to refund the $21.25 per-employee tax paid by New York businesses by having the federal government lend the states more money, interest-free. That'd be one thing if the federal government had loads of free money just sitting around, but in fact, the federal government is so broke that Mr. Schumer and his party's leaders are promoting a "balanced approach" to deficit and debt reduction, including — sure enough — job-killing taxes that would dwarf the $21.25 per employee at issue here.

Also qualifying this one as a Schumer classic is Mr. Schumer's disconnect from the reality of life in the private economy. His press release includes this quote: ""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."

First of all, most stamps now are peel-off stickers that don't require licking. Second, a lot of small businesses have postage meters anyway. Third, the New York State finance department has a reasonably user-friendly Web site that accepts electronic payments; a lot of employers who deal with the state directly probably transferred the money directly via that Web site (as I did) when their quarterly estimated payroll taxes were due July 31 rather than mucking around with a check and a stamp "this week." Finally, a lot of businesses also use payroll services like ADP or PayChex that also handle these sorts of transactions without the need for a either a mailed check or a stamp of either the peel-off-sticker or lickable variety.

I suppose Mr. Schumer should be applauded for realizing that this tax is both a bit of a hassle and a financial imposition on New York employers, and for wanting to rectify the situation. What's classic, though, is that his "fix" relies on the assumption that money from Washington is somehow free, and also that his press release shows he is out of touch with the modern realities of how businesses and individuals comply with the laws he passes.

by Ira Stoll  |  Aug 17, 2011 at 11:33 am Related Topics:  New York, Senator Schumer receive the latest by email: subscribe to the free futureofcapitalism.com mailing list