Lawmakers urge Democratic leaders to waive taxes on jobless benefits in COVID relief bill
A dozen lawmakers Thursday sent a letter to House Speaker Nancy Pelosi, Calif., Majority Leader, Steny Hoyer, Md., And the chairs of the House Rules and Budget committees where they are were asked to waive some 2020 unemployment benefits on federal income taxes.
"Workers and families are still grappling with the economic problems caused by COVID-19," lawmakers wrote. "Upcoming UI service tax charges take away important dollars that individuals must pay for essential expenses such as housing, healthcare, and groceries."
A woman verifies information while signs are displayed at the IDES (Illinois Department of Employment Security) WorkNet center in Arlington Heights, Ill., Thursday, November 5, 2020. Illinois reports the largest increase in unemployment claims of any state. (AP Photo / Nam Y. Huh)
Cindy Axne MP. (D., Iowa) led the push and 11 other lawmakers signed the letter. Axne and Senator Dick Durbin (D., Ill.) Have introduced laws that waived federal income tax on the first $ 10,200 in 2020. This could include benefits provided through the unemployed emergency programs put in place at the beginning of the pandemic.
"Without tax breaks for these benefits, however, millions of workers who applied for the UI last year could face an unexpected tax burden this spring," the legislature wrote. "In a survey conducted by Jackson Hewitt last fall, 39% of respondents did not know that UI benefits were taxable, with individual and younger taxpayers being less aware of the problem."
Legislators hope the public print campaign will convince the democratic leadership to include the measure in the COVID-19 relief law with a manager change. The House will vote on the aid package on February 26th.
In an interview with Yahoo Finance earlier this week, House Ways and Means Committee Chairman Richard Neal (D., Mass.) Argued, "It's pretty well known that unemployment benefits are subject to federal taxes."
"The challenge we have here is that we have additional unemployment insurance, and it has done a lot to help people pay rent, make mortgage payments and put food on the table," said Neal. "As long as we introduce the additional part of unemployment insurance, I would like to take a more measured view before I embark on another concept."
Jessica Smith is the Chief Political Correspondent for Yahoo Finance, based in Washington, DC. Follow her on Twitter at @ JessicaASmith8.
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