Sergio Ruvalcaba

Professor Scott Wang

WI2021-ACCTG-220-L1
3/11/2021
Chapter 5 Questions for Discussion.

1. Can the owner of a small business receive unemployment compensation? Explain.

 If you are a small business owner who runs their own one-person corporation, you may
be obliged to pay state unemployment insurance tax on your salary. As a shareholder in
a corporation who works in the business, you are entitled to receive employee benefits,
including unemployment compensation. This applies if you report yourself as an
employee and pay state unemployment insurance taxes on your wages.

2. What arguments could be made for raising the upper limits of the SUTA tax rates?

 Raising the upper limit for SUTA tax rates would aid in providing more funds to
government sponsored programs like unemployment insurance program. The SUTA
taxes credit can be taken against FUTA taxes thus raising SUTA tax rates would result in
more tax accumulation.

3. As a way of curbing the unemployment rate, California has a “shared-work compensation”

program. Under this program, a company faced with a layoff of its workers may place its entire
workforce on a four-day workweek during the period of hardship. During this period of reduced
workweeks, the employees collect partial unemployment benefits. When business rebounds,
the firm returns to its normal five-day workweek, and the unemployment compensation
benefits cease. Participation in the program must be approved by both the employer and the
unions. If, however, the firm is not unionized, management has the discretion of putting the
plan into effect.
a. What are the benefits of such a shared-work compensation program to (1) the employer
and (2) the employees?
 The shared-work program helps the organization to have a skilled and experienced
workforce during the time of financial hardship. The employer will also retain the
production and quality level as they do not lay off their workforce as much as other
companies might.
 The employees are also benefitted by the shared-work compensation program by
preserving the work, and job skills. They also prepare to work slow-down as this
program helps knowing the issue in advance and they are not required to look for a new
job.
b. What disadvantages do you see in the operation of a shared-work compensation program,
especially from the viewpoint of organized labor?
 Under the shared-work compensation program, the workers are compensated with
partial payment for the regular worksheet, this means it decreases in average income of
the workers. This decrease in payment most likely to spark the dissatisfaction among the
members of the organized labor unions as it is the duty if the organized union to
maintain the interest of its members of all the time.