Nevada casinos have fared well in much of 2021, as Americans are finally permitted to travel leisurely. Many have opted for Las Vegas to release their pent-up demand for entertainment.
Business has been good. Gross gaming revenue (GGR) has eclipsed the $1 billion mark in each of the past six months. But a pending decision in the Carson capital stands to impede the recovery, some business owners argue.
The Nevada Employment Security Council has proposed increasing the state’s unemployment insurance tax. The tax hike is part of an effort to replenish the state’s fund that distributed unemployment compensation to Nevadans who were put out of work during the pandemic.
Nevada’s Employment Security Division and Department of Employment, Training, and Rehabilitation jointly held a virtual public meeting last Friday regarding the proposed unemployment insurance (UI) tax increase. Many business and community leaders spoke in opposition to the rate hike.
Tax Increase Too Soon
Nevada was one of the hardest-hit states by the pandemic, as its economy relies heavily on tourism and business travel. The state continues to lead the nation in unemployment, with approximately 7.5 percent of Nevadans out of work in September.
While that’s down from eight percent in April of this year, it remains considerably higher than the national average of 4.8 percent.
But some business leaders believe increasing 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,” declared Gina Bongiovi, chair of the Vegas Chamber.
The Nevada Employment Security Council has proposed increasing the UI tax from 1.65 percent in 2021 to 2.0 percent in 2022. The difference, the Vegas Chamber argues, would cost employers as much as $130 per employee in 2022.
The US Bureau of Labor Statistics reports that as of September, Nevada’s leisure and hospitality sectors employed roughly 277,200 people.
Now is not the time to increase taxes on employers — especially small 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 Chamber statement declared.
“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,” the commerce release continued. “Additionally, the impact of the Delta variant is causing uncertainty that is slowing economic recovery.”
Nevada has been funding its unemployment claims with federal stimulus money made available through the CARES Act. The Nevada Employment Security Division must inform employers regarding the UI tax rate before January 1, 2022.
UI Tax Rates
States vary in deciding how to levy an unemployment tax rate on employers. The initial rate for new employers ranges from as low as 0.55 percent in South Carolina to as high as 3.689 percent in Pennsylvania.
Many states, including Nevada, offer a discounted UI rate for businesses that have long employed workers and have paid heavily into the state system. Discounts for industries far less prone to large UI claims are also available in Nevada.
The tourism industry, however, doesn’t fall into that category. And that’s why some feel a higher UI tax is warranted while economic conditions are seemingly improving.
“If we get into trouble with inflation or another downturn or another whatever type of situation … it’s better to hedge forward than wind up trying to buy our way out again,” opined Ray Bacon, executive director of the Nevada Manufacturers Association.
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