Tax Array System Explanation

• Each employer’s Reserve Ratio is recomputed every year. This recalculation may or may not result in a rate change.
• All employers are "arrayed" on a list in descending order by their Reserve Ratios. The employers are divided into 20 categories with approximately the same amount of taxable wages in each category.
• The 20 categories each have an experience factor. That is the proportion of the average contribution rate that is payable by employers in that category.
• The planned yield is determined from a set of formulas. It is the percentage of total (taxable) wages necessary to generate the desired amount of revenue.
• The average contribution rate, or predetermined yield, is then computed. It is the average contribution rate needed to generate the desired amount of revenue for the amount of taxable wages.
• The contribution rates for the 20 categories are computed by multiplying the predetermined yield by the experience factors for each category.
• An array system redistributes the contribution burden significantly.

EMPLOYER RATE ARRAY FOR YEAR 2006

The New Employer Rate for 2006 is 1.78%

TAXABLE WAGES FOR ALL EMPLOYERS IN THE ARRAY IN (M) 5,201.8
Created 12/11/2005

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