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“INTRODUCTION OF THE SUSPENSION OF FEDERAL INCOME TAX ON UNEMPLOYMENT BENEFITS ACT OF 2008” mentioning the U.S. Dept of Labor was published in the Extensions of Remarks section on pages E1744-E1745 on Sept. 9, 2008.
The publication is reproduced in full below:
INTRODUCTION OF THE SUSPENSION OF FEDERAL INCOME TAX ON UNEMPLOYMENT
BENEFITS ACT OF 2008
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HON. JOHN M. McHUGH
of new york
in the house of representatives
Tuesday, September 9, 2008
Mr. McHUGH. Madam Speaker, I rise today to introduce legislation, the Suspension of Federal Income Tax on Unemployment Benefits Act of 2008, which is designed to help unemployed Americans as they face increasing living costs and a sluggish economy. Specifically, the bill would suspend the federal income tax on unemployment compensation benefits for two years.
As of August 2008, 9.4 million Americans were unemployed, an increase of 2.2 million from just a year ago. Similarly, the unemployment rate has risen from 4.7 percent to 6.1 percent. Closer to home, as of the end of July, in New York State 522,000 people were unemployed, including 26,200 in the 23rd Congressional District, which I have the privilege of representing. Additionally, six of the 11 counties I represent had unemployment numbers that exceeded the national rate.
On September 4, 2008, the U.S. Department of Labor announced that initial unemployment insurance claims had increased 15,000 to 444,000 and that approximately 3.44 million Americans are now receiving unemployment compensation benefits, which currently average $294 a week. However, these benefits have been significantly eroded by substantial increases in the prices for consumer goods, perhaps most notably, food and energy.
Many fail to realize that Americans must pay federal income taxes on any unemployment compensation benefits they might receive. However, prior to 1979, those payments were excluded from federal income taxation and it was not until 1986 that Congress made such benefits fully taxable.
Accordingly, someone receiving the average unemployment benefit of
$294 a week ($1,176 a month) who elects to have federal income taxes withheld will realize a loss of approximately $117.60 a month--money that might better be used for necessities such as food, housing, health insurance, and gasoline. Moreover, many States also choose to make unemployment compensation subject to state income taxes, which further erodes the assistance these hard-working Americans receive in their time of need.
While I was pleased to join with my colleagues earlier this year to enact legislation to extend unemployment benefits for an additional 13 weeks, I firmly believe that we should take the next step of immediately increasing these benefits by exempting them from the federal income tax. Beyond greater assistance to millions of unemployed Americans, this measure would also act to stimulate the economy. In fact, as the Congressional Budget Office has previously estimated, the cessation of income taxes on unemployment benefits would return at least $3.1 billion annually to those taxpayers who are most in need.
Accordingly, as we consider new ways to help unemployed Americans and to boost the economy, I ask my colleagues to join with me to enact the Suspension of Federal Income Tax on Unemployment Benefits Act of 2008.
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