Sam Johnson: Unemployment benefits should not be taxed
Johnson offers provision to remove federal income tax on unemployment benefits for 2008 and 2009
Washington,
Jan 22 -
Just in time for the 2008 tax season, U.S. Congressman Sam Johnson (3rd Dist.-Texas) authored a provision to temporarily eliminate the federal income tax on unemployment benefits for 2008 and 2009 as part of the economic stimulus bill, H.R. 598, before the Ways and Means Committee.
While President Obama expressed his support for removing the tax on unemployment benefits (www.change.gov), the Committee Democrats defeated Johnson’s measure on a party-line vote.
“As we work to find ways to kick start the economy, I propose that we don’t kick folks when they’re down and that we eliminate the tax on unemployment insurance benefits for 2008 and 2009,” said Johnson.
“Pretty soon a demoralizing scene will be played out in millions of American homes. Unemployed people will open a 1099 form from their state showing the amount of his or her unemployment benefits in 2008. But for most people there won’t be anything listed on the form for how much money has been withheld from their benefit checks. People on long-term unemployment benefits will then face the scary realization that they just got another bill -- but this one is for taxes that come due on April 15,” said Johnson.
Estimates show that there were roughly 11.1 million unemployed Americans in December 2008, which translates into an unemployment rate of 7.2 percent. Many agree that this ranks as the highest unemployment rate since the 1992 recession.
According to 2006 IRS data, more than a quarter of taxable unemployment benefits are on returns with less than $30,000 of income; more than half of taxable unemployment benefits are on returns with less than $50,000 of income; and approximately three-quarters of taxable unemployment benefits are on returns with less than $75,000 of income.
“The 1099 statements that are showing up in mail boxes tell my constituents that they are going to owe federal taxes on their unemployment. I’d like to be able to tell my constituents that we’re going to do something about this problem in the stimulus bill,” said Johnson.
Johnson also offered two other amendments to H.R. 598 -- one on health information technology and one on Medicare.
Johnson voted against the stimulus bill that now heads to the floor of the House of Representatives for a vote.
# # #
