Which of the following statements is not correct? Multiple Choice

• The federal government allows a credit, or reduction, in the federal unemployment tax for amounts charged by the state for unemployment taxes.

• The normal federal unemployment tax rate of 0.6% (or 6.0% less the state unemployment tax credit of 5.4%) changes if favorable experience ratings change the state unemployment tax rate.

• The earnings limits for the federal and the state unemployment tax are usually the same, $7,000.

• Under the experience rating system, the state tax rate may be reduced to less than 1 percent for businesses that provide steady employment. In contrast, some states levy penalty rates as high as 10 percent for employers with poor records of providing steady employment.