Unemployment Fund Idea: Apply Surcharges During Periods of Low Unemployment

The South Dakota Retailers Association is holding meetings this month to grumble about the unemployment insurance fund. If I were a retailer, I'd grumble, too: with more folks out of work, the state has to pay out more assistance. When the fund rops below $11 million, the state levies a 1.5% surcharge on employers to keep the fund afloat.

Now I'm sympathetic to the idea that it doesn't help a business in the middle of a recession to suddenly have Pierre (or Washington) increase taxes. But it also doesn't help workers to cut funding for unemployment assistance right when people need that assistance (just like it doesn't make sense to cut Medicaid when more people need it).

The retailers are going to talk reform during their meetings, so maybe they could discuss this reform: maybe we could avoid a surcharge when the economy is in bad shape by imposing a surcharge when the economy is in good shape. Maybe it would make sense for employers to chip in a little more when the economy is growing. Impose that 1.5% surcharge when quarterly state GDP exceeds some benchmark. Put the bucket out when it's raining, right?

Of course, we might achieve the same goal with a wisely managed corporate income tax....