Evening star., 1943-06-11
By CLARENCE ARATA,

in the District.
BY CLARENCE ARATA.
Executive Secretary. Washington Board Of
Trade.
The most controversial aspect of
the McGehee amendment to the Dis
trict Unemployment Compensa ton
Law was the inclusion of the expert
ence rating method of applying en-
plover tax rates. Efforts in the Dis
trict to secure this type of legisla-
ton have extended over the last
three and one-half years Although
originally there was considerable dis
agreement over the principle in
volved. finally there was almost
unanimous agreement among local
employers in attempting to effect tax
reductions on the merit basis.
Under experience rating. each en-
ployers account in the Unempioy-
meEt Compensa ton Board is kept on
an individual basis Although all
employers contributions are pooled
into a single common fund. each
employer will have an individual re-
serve account, not as matter of
actual dollars designated as his, but
as bookkeeping item. A regular
ledger account will be maintained
with his contributions as credits and
the benefits chargeable against his
account as debts.
How System Works.
The individual employers contri-
button rate is determined by a set
formula outlined IN the law 1t
works like this: A record is kept of
the employers contributions for the
36-c observation-disclosures preceding
the date as of which the tax rates
for any calendar year are computed.
Suotracted from that figure is the
amount of benefits paid out of the
District reserve fund during that
same period, drawn by such en-
ployers' former employees and
chargeable to his account.
The difference is called the en-
ployer's reserve. The amount in the
reserve is then related to the en-
ployer's average annual taxable pay
roll over the same three -year-period
Actual contribution rates are then
determined as follows: (a) If the re-
serve is less than l per cent of his
average annual payroll. the rate
shall be 81 per cent; ID, if the re-
serve equals or exceeds l per cent
but is less than Is per cent, the rate
shall be 2 per cent: tc) if the reserve
equals or exceeds Is per cent but is
less than per cent the rate shall
be is per cent; (d) if the reserve
equals or exceeds per cent but is
less than 3 per cent, the rate shall
be l per cent: (e) if the reserve
equals or exceeds per cent but is
less than 3.5 per cent the rate shall
be 0.5 per cent: dD If the reserve
equals or exceeds 35 per cent the
rate shall be OIL per cent.
II the amount of benefits with
drawn exceeds the amount of con-
tributions paid, the employer has a
tax rate of 81 per cent
Employment Generally Stable.
1t is estimated on the basis of
figures secured from the District
Unemployment Compensation Board
that employers whose payrolls ap-
proximate SO per cent of private
payrolls in the District will be eligi-
BILE for the lowest rate of one-tenth
OF one per cent This is due to the
fort fhof uyocIi~rf0yo
generally maintain a highly stable
level of employment
1t should be borne in mind that
mere labor turnover does not ad-
versely affect any employers tax
rate. Charges are made against an
employers account only when his
former employees withdraw benefits
from the fund.
Under experience rating it is not
necessary. as many employers have
thought. to pay into the Federal Un-
employment Compensation fund the
difference between a given reduced
rate and the per cent Federal tax.
Under the Federal Unemployment
Compensation Tax Act. credit for 80
per cent of the Federal tax is given
to each employer in a State having
its own unemployment compensa-
ton law. Under such provisions the
standard tax rate applied, therefore,
Is 27 per cent into the State fund
and three-tenths. of one per cent into
the Federal fund.
Additional Credit Earned
When State adopts an experience
rating method of applying the tax.
however, an additional" credit is