Unemployment benefits should match local needs: Rep. McHenry
House Financial Services Committee ranking member Rep. Patrick McHenry, R-NC, believes the next coronavirus stimulus package needs to include pro-growth tax policy and regulatory policy to lift the economy and encourage people to go back to work. He also believes unemployment benefits need to be based on a state or locality’s specific needs and the Federal Reserve should only use its toolbox in the most ‘egregious circumstances’ to save the economy.
More than 45 million Americans have filed jobless claims since mid-March, but many are confused about temporary benefits being offered by the federal government.
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Under the CARES Act, eligible Americans who are out of work entirely or underemployed because of reasons related to coronavirus can receive an additional $600 a week for up to four months.
But according to a recent survey from tax preparation service Jackson Hewitt, Americans are not entirely clear about what that means for their taxes, even though 16 percent said they had been laid off or furloughed.
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Thirty-seven percent of respondents thought unemployment compensation was not considered taxable income.
More than half of respondents did not know that they had to request to have taxes withheld from unemployment compensation. Failure to do so could result in taxes owed to the IRS.
Overall, about one-third of respondents said their 2020 income would fall short of what they earned in 2019.
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The unemployment insurance increase is generous. Benefits for 68 percent of workers are likely exceeding what they would have earned if they were still working, and the median replacement rate for about 20 percent of people is 134 percent.
Meanwhile, lawmakers are debating whether to extend the expanded benefits, which are currently scheduled to expire on July 31.
While Democrats are in favor of the policy, Republicans and the Trump administration have expressed dismay over the perception that it may discourage some people from going out and seeking new employment. The administration has backed what it calls a “back to work bonus” as an alternative, which would provide an incentive for individuals to reenter the marketplace.
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