The document critiques the U.S. unemployment insurance experience rating system, which charges firms with more layoffs higher taxes, arguing that it was meant to discourage layoffs but instead suppresses economic dynamism and harms workers, particularly young and entry-level employees.
It finds that experience rating discourages hiring, encourages the use of contractors, and results in regressive, unpredictable taxes, recommending a shift to a flat payroll tax system to create a more dynamic and equitable labor market.
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