Washington, Sep 11 -

WASHINGTON, D.C. September 11, 2008 – U.S. Representative John R. “Randy” Kuhl, Jr. (R-Hammondsport) today introduced legislation to help unemployed Americans as they face rising energy costs, food prices, and inflation in a faltering economy.  The Suspension of Federal Income Tax on Unemployment Benefits Act of 2008, H.R. 6844, would suspend the federal income tax on unemployment compensation benefits for two years.

“As of August 2008, 9.4 million Americans were unemployed. Many people do not realize that the unemployed must pay federal income taxes on the unemployment compensation benefits they receive. On average, an unemployed individual making $1,176 a month in unemployment compensation is currently losing $117.60 a month because of federal income taxes,” said Rep. Kuhl. “This legislation would put a two year freeze on this federal income tax so that $117.60 could go towards keeping the roof over their head, putting gas in their car, or feeding their family.”

Unemployment compensation (UC) benefits have been fully subject to the federal income tax since the passage of the Tax Reform Act of 1986 (PL 99-514).  The purpose of taxing UC benefits was to reduce the incentive to remain unemployed.

There are approximately 522,000 residents of New York State who are currently unemployed. On September 4, 2008, the U.S. Department of Labor announced that initial unemployment insurance claims increased 15,000 to 444,000 and that about 3.44 million Americans are now receiving unemployment compensation benefits, which currently are about $294 a week on average. 

In June, Congressman Kuhl also joined his colleagues to extend unemployment benefits. He voted in favor of the Emergency Extended Unemployment Compensation Act, H.R. 5749, which would provide up to 13 weeks of extended unemployment benefits in every state. In addition to providing up to an additional 13 weeks of extended unemployment benefits, the Emergency Extended Unemployment Compensation Act provides up to an additional 13 weeks in States with unemployment rates higher than six percent.

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