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Do you think people receiving unemployment income should pay taxes on that income?
If unemployment payments essentially come from taxes, does it make sense that people receiving unemployment income pay taxes on that income?
I'm not taking a position here, but it seems as though taxing one group to give that money to another, and then taxing the recipients is kind of financial circular logic. Maybe I don't fully understand the intricacies of taxation.. If you do, please enlighten.
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7 Answers
I do not think that unemployment income should be exempt from income taxes. If a person is receiving money, there is no reason it should not be considered taxable income just like interest income or wages from a job. It is possible that person could pay no income tax or a very limited amount of income tax because of the way our federal income tax system works.
You could also look at it from a retired person's perspective...many retired people have to pay income tax on a large percentage of the social security payments they receive. Social security (like unemployment) comes from taxes...and while it may not make sense that people pay tax on that income, that is the tax law.
Unemployment is already taxable income by both state and federal governments. It is reported on a 1099 form by the states. See this http://www.irs.gov/newsroom/article/0,,id=201866,00.html
Most states give a person receiving unemployment the option whether to have federal and/or state income taxes withheld.
It is possible to pay no income taxes on unemployment compensation but only for the same reasons you wouldn't have to pay income taxes on regular income such as owing no taxes due to exemptions and deductions.
Whoever thought that unemployment compensation was not taxable did not have their facts straight or did not check with the IRS.
Independent of any social or political agenda that might be perceived in answering the question, everyone should pay some tax, however nominal the amount.
This is a fundamental position that goes back to Adam Smith, and the importance of participating in and contributing to an economic system that provides limitless opportunity (even if an individual is temporarily supported by the fruits of others' labors).
Yes, I do. I think that everyone who receives any income from the government (tax payers) including welfare, should pay something even if it is only $1 a week.
Additionally, if there was only a way to eliminate the many people who consider unemployment as a summer vacation or time to spend with the kids rather than looking for a job. Is it wrong to expect that people receiving unemployment who expect to work 40 hours per week, spend 40 hous per week looking for a job?
Just a thought!!!
I think there are two sides to this question and I don't mean pros and cons. Financial professionals and economic academics can explain why the income should be taxed as a matter of law or policy, but I do think it lacks a modicum of common sense. Why battle over the crushing financial burden of social programs including Social Security and unemployment, when the government essentially pays itself back a portion of the distributed funds via the income tax? Strictly a lay perspective, but our social programs could take some lessons from EU countries and be considerably more social in their efficiency.
Jerry I agree and of course it will cost money to collect those taxes so rather than pay themselves back, the government would loose money ! People still spend their unemployment income and therefore pay sales tax
No, You are out of work. Why penalize people again especially in this down economy. Unemployment payments are low enough as it is. Taxing them again is just adding insult to injury.
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