[Excerpt] While the debate in the 112th Congress commonly referred to a proposed policy of restricting the receipt of unemployment benefits by “millionaires,” the various proposals specified different income thresholds. For example, one proposal would have placed restrictions on unemployment benefit income for a single tax filer with AGI beginning at $750,000 (or beginning at $1.5 million for a married couple filing a joint return). Another proposal would have placed restrictions on unemployment benefit income for a single tax filer with AGI of at least $500,000 (or at least $1 million for a married couple filing jointly). Although the proposals varied in how they define high-income individuals, each would have restricted individuals and households with incomes above a specified threshold from receiving unemployment benefits.
This report addresses many of the questions that have arisen regarding such proposals, including the potential number of people who would be affected and the potential savings to federal and state governments. To place these proposals into context, the report provides a brief overview of the UI system and explains why receipt of UI benefits is not restricted based on income under current law. It then presents Internal Revenue Service (IRS) data on the distribution of household income and unemployment benefits for tax years 2008 and 2009 to shed light on the size of the group potentially affected by such proposals. The report raises policy considerations such as the potential impact of such proposals on federal expenditures, given the joint federal-state nature of unemployment programs. Finally, it summarizes relevant legislation in the 112th Congress.