Blackwell Reference Online

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This unemployment insurance program, or FUTA, is a mixed federal–state program. Part of the Social Security Act of 1935 , FUTA requires employers to pay a 6.2 percent federal tax on the first $7,000 of each covered employee's salary; but they receive a tax credit of up to 5.6 percent, offsetting state unemployment taxes paid. FUTA taxes pay for administration of unemployment insurance and Job Service programs in the states. In times of high unemployment, FUTA taxes also go to pay half the cost of extended unemployment programs. States provide unemployment funds in their state, and determine individual employer state tax rates based on an experience factor, which is a function of the taxes paid in and the benefits claims attributable to an employer. ( 2001 ). Employee Benefits , 6th edn. Chicago : Dearborn Financial Publishing , pp. 74 – 9 . ( 2001 ). State unemployment compensation programs . In , The Handbook of Employee Benefits: Design, Funding and Administration , 5th edn. New York : McGraw‐Hill , pp. 557 – 71 . ... log in or subscribe to read full text