Almost 2,400 people in millionaire homes received unemployment benefits in 2009
Oct. 2 (Bloomberg) -- Almost 2,400 people who received unemployment insurance in 2009 lived in households with annual incomes of $1 million or more, according to the Congressional Research Service.
The report was released after about 1.1 million people exhausted their jobless benefits during the second quarter of 2012, when more than 4.6 million filed initial unemployment claims. Eliminating those payments to high earners is one idea being considered as U.S. lawmakers struggle to curb a projected $1.1 trillion deficit for the fiscal year that ended Sept. 30, with the nationwide jobless rate at 8.1 percent.
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“Sending millionaires unemployment checks is a case study in out-of-control spending,” U.S. Senator Tom Coburn, an Oklahoma Republican, said in an e-mail. “Providing welfare to the wealthy undermines the program for those who need it most while burdening future generations with senseless debt.”
The 2,362 people in millionaire homes represent 0.02 percent of the 11.3 million U.S. tax filers who reported unemploy- ment insurance income in 2009, according to the August report. Another 954,000 households earning more than $100,000 during the worst economic downturn since the Great Depression also reported receiving unemployment benefits.
The reported benefits may include those received by spouses or dependents of people who made high incomes, or benefits received earlier in the year before a household member got a high-paying job.
Eliminating the federal share of unemployment benefits for millionaires would save $20 million in the next decade, the congressional researchers said in their report.
Prohibiting Benefits
Congress has expanded unemployment benefits that had been paid for by states and lasted 26 weeks. The federal money lengthened the maximum period to 99 weeks, though the researchers said in practice no state currently offers more than 79 weeks.
Coburn introduced legislation in February 2011 to prohibit federally funded unemployment benefits for people who had at least $1 million in assets in the year before they filed a claim. The Senate voted unanimously for his measure, the Ending Unemployment Payments to Jobless Millionaires Act of 2011. It was later added to another bill, which hasn’t passed the Senate.
Coburn found that 18 households reporting an adjusted gross income that exceeded $10 million received an average unemployment benefit of $12,333 in 2009. The average benefit for 74 households earning between $5 million and $10 million was $18,351. The average household making $1 million or more received $11,113, or about 37 weeks of unemployment benefits.
Payroll Taxes
Unemployment benefits, which averaged about $300 per week in 2011, are paid out of accounts funded by payroll taxes and administered by states. Like Social Security and Medicare, the federal health insurance program for the elderly and disabled, unemployment insurance has no income limits.
The Internal Revenue Service reported that 2,840 millionaire households, or 0.03 percent of tax filers, received unemployment benefits in 2008. Another 816,700 beneficiaries earned between $100,000 and $1 million in 2008, the report said.
The House of Representatives last December passed a bill that would have taxed jobless benefits at 100 percent for single filers with an income of $1 million or married filers earning more than $2 million. The provision, part of a jobs bill written by Michigan Representative Dave Camp, a Republican who leads the House Ways and Means Committee, was dropped before the legislation was sent to President Barack Obama for his signature.
Auctioning Airwaves
Lawmakers voted in February to fund the $30 billion cost of extending unemployment benefits by auctioning public television airwaves and increasing pension contributions by new federal employees. The extension expires at the end of the year.
During the recovery from the recession, real unemployment, including discouraged workers and part-time employees seeking full-time jobs, peaked at 18 percent in January 2010. The number of American workers who collected unemployment benefits topped out at 6.6 million in May 2009, the highest seasonally adjusted number in more than 30 years, according to the Labor Department’s Employment and Training Administration.
The average unemployed American is out of work for nearly 40 weeks, according the U.S. Bureau of Labor Statistics. Even so, congressional researchers said it’s possible that IRS figures understate the number of households that receive unemployment insurance because the first $2,400 in benefits wasn’t taxed in 2009, although it is now.
