What tax is part of the federal and state program under which unemployment compensation is paid to workers who lose their jobs?

The Federal Unemployment Tax Act (FUTA) is the correct answer because it establishes the federal framework for unemployment insurance in the United States. Under FUTA, employers are required to pay a tax that funds the federal government's unemployment insurance program, which in turn provides financial assistance to workers who have lost their jobs through no fault of their own. This program is essential for providing temporary financial support during periods of unemployment, helping individuals to sustain themselves as they search for new employment opportunities.

FUTA works in conjunction with various state unemployment compensation programs, which are governed by state laws. Each state administers its own unemployment insurance program, which must comply with federal guidelines set by FUTA. Therefore, understanding the relationship and the role of FUTA in providing unemployment benefits is crucial for contractors and business owners to ensure compliance with federal regulations while managing their payroll taxes effectively. This also emphasizes the importance of employers contributing to this fund to maintain a safety net for the workforce.