Thousands of millionaires were collecting government unemployment checks while essential workers were paying into the system during the coronavirus pandemic, according to IRS data.
More than 19,000 tax filers who reported earning at least $1 million in 2020 also collected unemployment benefits that year. They walked away with more than a quarter of a billion dollars in payments, the IRS found.
Among them were 229 taxpayers who earned at least $10 million that year yet also applied for and took unemployment payments. Nearly 700 more taxpayers collected jobless benefits despite making $5 million to $10 million.
Sen. Joni Ernst, an Iowa Republican who in 2020 tried to draw attention to the likelihood that millionaires would get unemployment benefits, said it was particularly galling to see them collect money while so many lower-wage workers were still on the job and paying taxes to fund the system. She called it the “reverse-millionaire tax.”
“The true million-dollar question is: Why did Congress continue to pay the rich not to work?” she said.
She planned to announce legislation Wednesday that would cut off federal unemployment payments to those with million-dollar incomes. Sen. Jon Tester, Montana Democrat, is sponsoring the bill with her.
Millionaires are entitled to unemployment payments because of a 1964 Labor Department ruling that said states could not impose a means test on the program’s beneficiaries.
Ms. Ernst’s bill would require anyone applying for unemployment benefits to attest that they fall below her $1 million threshold of adjusted gross income.
The legislation would have to clear the Democratic-controlled Senate after passing muster with Sen. Ron Wyden, the Oregon Democrat who serves as chairman of the Finance Committee.
Mr. Wyden’s office didn’t respond this week to an inquiry about millionaires collecting unemployment benefits, though he has backed legislation similar to Ms. Ernst’s bill in the past.
After the number of millionaires collecting unemployment rose during the 2008 Great Recession, then-Sen. Tom Coburn announced a proposal to bar them from the government spigot. The bill cleared on a 100-0 vote in 2011.
The House never took action on the legislation, and it never became law. Millionaires were eligible to sign up when Congress expanded unemployment benefits at the start of coronavirus lockdowns in the spring of 2020.
Those benefits were exceptionally generous: $600 a week in addition to whatever states were paying.
The goal was to help people stay in their homes and buy groceries as nonessential businesses shuttered during shutdowns intended to stop the spread of the coronavirus.
IRS data shows that 19,015 filers with incomes of $1 million or more reported unemployment benefit income and collected a combined $266 million.
A slight majority earned $1 million to $1.5 million. Roughly 7,000 others reported earning $1.5 million to $5 million.
Millionaires have often collected unemployment benefits, but the numbers are usually much smaller.
After the Wall Street collapse in 2008, the number of taxpayers with million-dollar incomes who collected unemployment benefits peaked at 3,171. By 2014, the number was down to zero, according to the Congressional Research Service.
In 2018, 3,273 taxpayers with million-dollar incomes reported unemployment income. Just 34 filers who made $10 million or more reported unemployment.
The IRS didn’t report breakdowns for 2019. It said the numbers were so small that releasing the data could impinge on taxpayers’ anonymity. The IRS didn’t respond to an inquiry about the reporting thresholds.
The Congressional Research Service, analyzing the issue in 2016, said an income limit might cost more money than it saves and might deter people who are eligible from applying.
“For example, a person who becomes unemployed early in the year may expect (erroneously) to have income over the course of the year above the applicable threshold, and therefore may choose not to apply for benefits based on an expectation that those benefits would only be recaptured later through the tax system,” CRS said.
The millionaires have had some defenders. In 2010, The Atlantic published a piece saying the amount of money involved — $5 million at the time — was too small to worry about.
The magazine said the millionaires likely had paid into the system for years and felt they couldn’t pass up the chance to get something back.
It’s also likely that some are couples filing joint returns with one spouse having a million-dollar income and the other experiencing unemployment.
It wasn’t just millionaires who turned to the unemployment system during the pandemic.
IRS statistics show that more than a quarter of taxpayers who reported income of $15,000 to $30,000 received unemployment payments in 2020.
In 2019, before the pandemic, that rate was roughly 3%.
For more information, visit The Washington Times COVID-19 resource page.