Unemployment benefits shouldn't be taxed
When a laid off worker gets an unemployment check, it's nowhere near the amount he would have received had be been working. In most cases, an unemployed worker receives little more than what he needs to pay his bills.
Yet under the current tax system, unemployed workers are expected to pay federal income taxes on any amount of benefits they receive. In many cases, those workers face a substantial expense come April 15, especially if they neglected to set aside any of their benefits.
A Pennsylvania congressman hopes to change that by eliminating federal income taxes on unemployment benefits. U.S. Rep. Phil English, R-3rd, will propose to Congress that unemployment benefits be exempt from income taxes.
"While the taxation of benefits is unfair in itself, the financial hardship for recipients is compounded in April when people realize nothing was withheld and they have to put up extra money to pay Uncle Sam," English, of Erie, said. "The best way to deal with the problem is to just eliminate the tax. It's inefficient and mean-spirited."
We agree. Unemployed workers don't ask to be employed. Given their choice, most would rather remain at work and pay their fair share of taxes than scrape by on an unemployment check and then get socked with taxes they can ill afford to pay. For years, unemployment benefits were exempt from taxes, but that changed in with tax reform legislation implemented in 1986.
English is not far off the mark when he calls taxes on unemployment benefits a "kick 'em when they're down tax." It is philosophically wrong to tax someone on income they are receiving as a way to tide a person over until he gets back to work. Imagine taxing welfare benefits: this isn't much different.
English concedes his proposal will have a hard time making it through Congress, because it could very well be included in President Bush's proposed plan for tax relief, and Democrats will surely oppose anything the president proposes. He said some Democrats will likely reason that exempting unemployment benefits from taxes will unfairly benefit the wealthy.
Indeed, some Democrats would try to link any tax cut to some underhanded effort to make the rich richer. However, we fail to see how such an argument could be made relative to English's proposal. We would hope that Democrats, who wanted to extend unemployment benefits 13 weeks further than Republicans in Congress wanted to, would be more than willing to take up English's cause. Because politics always trump common sense, that's not likely to happen.
That's unfortunate, because English's proposal is full of common sense. Eliminating the tax on unemployment benefits is the right thing to do.
"The folks that most need help in this economy would benefit most from this repeal," he said. "There are folks for whom every dollar counts."
