The pandemic forced 40 million people onto unemployment aid.
But because of a 1980s GOP law, they have to PAY TAXES on those benefits, as @ENPancotti explains.
Senate Democrats have a temporary fix in the relief bill. But there's more to this story.
But because of a 1980s GOP law, they have to PAY TAXES on those benefits, as @ENPancotti explains.
Senate Democrats have a temporary fix in the relief bill. But there's more to this story.
Under current law, unemployment benefits are STILL taxable (even if those taxes are waived this year).
In other words, we provide emergency aid to people facing genuine hardship, then we tell them to send part of that aid back to the IRS.
Why is this happening?
In other words, we provide emergency aid to people facing genuine hardship, then we tell them to send part of that aid back to the IRS.
Why is this happening?
For 40 years, unemployment benefits were viewed as they should be—as necessary, life-saving aid. They weren't taxed.
On average, these benefits cover less than half of a worker’s previous wages.
On average, these benefits cover less than half of a worker’s previous wages.
But in 1974, a conservative economist named Martin Feldstein began arguing that unemployed people should be taxed to 'incentivize' them to get back to work.
By 1986, under President Reagan, Republicans changed the law to tax all unemployment benefits.
By 1986, under President Reagan, Republicans changed the law to tax all unemployment benefits.
These taxes can be devastating.
As one unemployed person told Washington Post: “My savings is gone. Most of my 401(k) is gone. I’m $6,000 in credit card debt and behind on my rent, and now I owe the government $1,500 in taxes on my unemployment.”
washingtonpost.com/business/2021/…
As one unemployed person told Washington Post: “My savings is gone. Most of my 401(k) is gone. I’m $6,000 in credit card debt and behind on my rent, and now I owe the government $1,500 in taxes on my unemployment.”
washingtonpost.com/business/2021/…
For people still receiving unemployment aid during the pandemic, Congress should fix this.
But if they don't, @JanetYellen has the power to do it with the stroke of a pen.
But if they don't, @JanetYellen has the power to do it with the stroke of a pen.
Our tax code says government payments "in connection with a qualified disaster in order to promote the general welfare" are excluded from income taxes.
That describes COVID-era jobless aid.
Sec. Yellen can direct the IRS to clarify that this aid isn't taxable. And she should.
That describes COVID-era jobless aid.
Sec. Yellen can direct the IRS to clarify that this aid isn't taxable. And she should.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
