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Tax cuts reduced unemployment fund

Forecasters at the Kansas Department of Labor badly underestimated the demand for unemployment benefits, as did many other economists. But one reason Kansas' Unemployment Insurance Trust Fund is running out of money is that businesses haven't consistently paid into the fund in recent years. Because it believed the trust fund had an adequate balance, the Legislature halted unemployment taxes from 1995 through 1999, saving employers an estimated $556 million in taxes. Reduced tax rates have also been in effect the past three years, which saved employers an estimated $286 million. Such reductions seemed like good policy at the time, as no one expected the economy to contract so severely and so quickly. And lower taxes might have helped some businesses employ more workers. It's also worth recalling that many GOP legislators were initially opposed this past session to a minor law change that enabled the trust fund to draw down nearly $70 million in federal stimulus dollars.

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