picking at their empty pockets. And data demonstrates that some states offer better prospects than others.The Tax Foundation reports that more than five million Americans are drawing unemployment insurance benefits. But because UI is a joint federal-state program, state taxation of these unemployment benefits varies. While 41 states tax wage income, six fully exempt unemployment benefits, and two states partially exempt them. The remaining 35 states fully tax unemployment benefits. States without a state income tax have been excluded from this. These are the six states that promise to protect benefits from being taxed:
California
It is no surprise that “The Golden State” is the most populous U.S. state when one considers its big bridges, Hollywood reputation, and perfect weather. However, a quick glance at its economic numbers may surprise people that its statistics don’t deter people from calling it home.
As of March 2013, the third largest state in America had an unemployment rate of 9.4 percent, with 1,748,519 unemployed persons. Despite California’s status of being the world’s ninth largest economy, its economic climate essentially compels that it protect its unemployed from owing income tax on their UI benefits. Though the state has been slower to recover from the economic crisis than the U.S. has as a whole, reports show that it is now working on a comeback. One of the first points on its agenda is to reduce regulation on businesses and increase their hiring capacity, hopefully facilitating the gradual employment of the unemployed that the state now must diligently protect.
Maryland
Back
on the East Coast, another state that exempts its unemployed from state
income tax is Maryland. Unlike California, this state has an unemployment rate
1 percentage point lower than the national figure at 6.6 percent.
Though it protects its 206,684 unemployed people, many complain that
Maryland on the whole is “high tax,” contributing to an exodus of many
of its more wealthy residents. According to a report by Watch Dog Wire
last month, Maryland has lost 27,433 residents since 1995. This is in
part due to the higher income tax rate that the state created last year
for those making over $100,000. However, Maryland is now inching down
from its unemployment peak in December 2009 at 8 percent and is now 1.4
percentage points lower. Thus, although the state may not currently be a
haven for the wealthy, it continues to provide support for its
unemployed.New Jersey
Maryland’s
East Coast neighbor tells a different story. The Garden State may be
rich in resources, but it isn’t rich in jobs. New Jersey’s unemployment rate
sits at 9.0 percent, well above the national average. Its number of
unemployed people peaked in August 2012, but is now 30,143 people lower
at 414,973. While New Jersey has shown slow recovery growth, it
continues to enact new incentive programs for creating jobs and
undertaking capital improvement projects, indicated by the 8,100 more jobs
the state added in March 2013. Consequently, the state continues to be a
refuge for the unemployed, as it absolves them from UI
tax responsibility and slowly increases the number of available jobs.Oregon
Back
in the Northwest, Oregon, another tax haven for the
unemployed, contends with a similar issue as its aforementioned neighbor
to the South. The state bears an 8.2 percent unemployment rate,
a number that is 0.6 percentage points higher than the national and one
that is ever so slowly decreasing. It hosts 159,920 unemployed persons,
according to March 2013 data, but adds around 1,900 jobs a month. According to a March 2013 economic forecast,
there is little hope that Oregon will see much immediate improvement in
economic growth. However, the stage is set for stronger growth should
the economy manage to successfully navigate the next few months.
Employment in Oregon continued to increase throughout 2012,
approximately in line with the gains seen at the U.S. level. And this
trend is expected to continue.Pennsylvania
The Keystone State exhibits a slightly different unemployment rate
pattern. Pennsylvania’s rate currently stands at 7.9 percent and is
inching down. However, this follows a rise of 0.3 percentage points from
its post-peak low in January 2012. The reported total of 512,474
unemployed persons in March 2013 is also now decreasing again after a
large increase from a trough of 487,491 in February 2012. Although
Pennsylvania’s contribution to the national economy has diminished with
its decreased focus on coal and steel, the state continues to recover
from the Great Recession at nearly the same pace as the country as a
whole. It has also committed to continue to offer income tax exemptions
for its unemployed.Virginia
Although
many claim that “Virginia is for lovers,” there may be a similar
argument that “Virginia is for the unemployed.” Not only does the state
offer tax exemption, but it also boasts a 5.3 percent unemployment rate,
2.3 percentage points lower than the national figure, and the lowest of
any of the aforementioned tax havens. The peak of its unemployment rate
in 2009 of 7.4 percent is still lower than the current national rate.
In addition, its number of unemployed persons is conclusively on the
decline, down 80,134 persons from February 2010.Additionally, economic analysts forecast that Virginia will continue to see growth. Christine Chmura, president and chief economist of Chmura Economics & Analytics, made predictions in April that Virginia will significantly prosper from the effects of sequestration and global trade
, increasing the need for more workers and paving the way for more opportunity. LINK
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