Where has all the FUTA Gone? Or What the FUTA where's my SUTA

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Where has all the FUTA Gone?

Or

What the FUTA where's my SUTA


June 5th, 2009


Did you know that most of the employed do not know that their employer
pays matching taxes on their gross pay? They pay ½ of the total amount of the
FICA tax. You pay and see on your paycheck a deduction of 6.2% for FICA. Your
employer pays an additional 6.2% out of their pocket. It’s a nice way of hiding
how much the federal government is actually taxing for FICA. The self employed
pay the full 12.4%. Does the reader see the light bulb? Our 36% tax rate if born
completely by the individual would be over 40%. The next time you hear our
elected leaders want to raise taxes by a mere 3% remember it is in reality a 6% tax
increase.

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This brings us to another little known tax that is born solely by the employer,
the FUTA and SUTA. FUTA stands for the Federal Unemployment Tax Act. This
has been around for decades. This tax is based on your gross pay but you do not
pay it or see it. Your employer pays 8% of your first $7,000.00 into this fund.
SUTA stands for State Unemployment Tax Act. Your employer pays 2% of your
first $7,000.00 of pay, again you never see this. We see the states paying
unemployment benefits and we see the federal government providing stimulus
monies to help out. The answer is probably innocent but since no one is talking
about it, we decided why not us. How much FUTA has been collected over the
past thirty years and where is it?

Let’s do the math; the average unemployment for the past thirty years was
4%. Unemployment benefits are limited by amount and time on the rolls and it is
assumed that the state unemployment provides the majority of funds. Eight
percent of the first $7,000.00 of gross pay times 100 million employees. 56 billion
dollars per year has been collected. 56 billion dollars over thirty years is 1.68
trillion dollars. Considering that the state pays the majority of unemployment
benefits, even if the federal government paid $10,000 to each of the four million
unemployed per year a reserve of 16 billion dollars per year would still be in
reserve.

This should be the most overfunded fund within the federal government. At
least 480 billion dollars is out there somewhere. Since the federal government is
using stimulus funds to pay for state unemployment benefits, where are the surplus
FUTA funds?


Remember the Author only used thirty years for the math. This has been
around a lot longer. The Author also used a figure of $10,000 for each unemployed
person; it’s a lot less if at all. Remember the federal government is using stimulus
funds and not FUTA funds so the total amount held in reserve should be stunning.



Thank You,



Site Administrator

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