Tax Analysts Blog

Millionaires on Unemployment

Posted on Nov 30, 2009

As Jackie Calmes reports in this morning's New York Times, a top priority for this Congress is to extend unemployment benefits before year end. For millions of families that depend on these benefits this will be welcome holiday news. But not all recipients of unemployment benefits deserve our sympathy. According to IRS data 1,972 Americans with incomes above $1 million received unemployment benefits in 2006. (Comparable data for later years are not available.)

In 2006 a total of $2.5 billion in unemployment benefits were paid to households with incomes over $100,000. In 2007 the comparable figure was $2.8 billion.

More recent data are available from the Bureau of Labor Statistics. Since 2007, along with the unemployment rate, total unemployment benefits have skyrocketed--from $32 billion to an estimated $81 billion for 2009 (estimate based on data through October).

Like social security, unemployment benefits are not means-tested. Anybody who earns a salary pays a small unemployment tax and is eligible for benefits when the job goes out the window. So fair is fair. These unemployed millionaires paid into the program. They should be able to take out. But there is something galling in these terrible economic times about Congress struggling to pay for these benefits when some of the recipients should probably be paying more in taxes instead of receiving benefits.

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