Tax cuts have consequences. Often terrible.
The Rude Pundit
So it was that between 1992 and 2000, in a tax-cutting fervor, the loyal legislators and governors of North Carolina (motto: "No matter what, we're so much better than South Carolina"), people of both parties, saw that the unemployment insurance program was flush with cash. So they passed 11 different cuts to the amount that businesses would have to pay in taxes for the unemployment insurance trust fund. In 1994, during those heady days of the Clinton era, when the number of unemployed was low, the fund had enough money to pay out four years in benefits, the third largest cash reserve in the nation, so why wouldn't you pass another 23% tax cut, making the rate for businesses the lowest in the nation, with some businesses having their rate cut to zero. In fact, by the end of all the cutting, over 75% of North Carolina businesses effectively paid no UI tax, all done under the mantle of "reducing government" and other nonsense. This was assuming, of course, that nothing changed in the economy. North Carolina never thought a rainy day was coming, and if it was, it would be a drizzle.
But then the Bush deluge happened, and shit changed, as we all know. Not only did the unemployment rate jump by six points between March 2007 and March 2009 in North Carolina, but the state had to borrow money from the federal government to cover the cost of unemployment benefits. Had the rate of contribution stayed at pre-1994 levels, the state would have had enough. Alas, man? Dick? Stranger? What are you gonna do?
You're gonna punish the unemployed is what the fuck you're gonna do. What? You think that Republican Governor Pat McCrory, working nose in ass with the NC Chamber of Commerce, is going to raise taxes back to what they were in the Clinton era? Fuck you, socialist. McCrory just signed legislation that, while it does raise taxes a little, slashes benefits for the jobless. It's like businesses got a paper cut and your laid-off sister got a prison shiv in the gut. In order to repay the federal government, the maximum amount unemployed people get is reduced from $535 to $350 a week, with the maximum weeks cut from 26 to as little as 12. Because North Carolina changed its laws, it has forfeited $780 million in federal benefits. It's sort of like being kicked in the nuts from behind. By the way, without the change to benefits, it would take North Carolina three years longer to repay it.
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