WASHINGTON — It is an image many Americans would find rather upsetting: a recently laid-off millionaire, luxuriating next to the pool eating grapes bought with food stamps while waiting for an unemployment check to roll in.
Under the Republican bill to extend a payroll tax holiday scheduled to be voted on in the House as early as Tuesday, those Americans with gross adjusted income more than $1 million would no longer be eligible for food stamps or jobless pay, producing $20 million in savings to help pay for the tax cut for U.S. workers. The idea is also embraced by many Democrats, who had a similar version of the savings in a Senate bill to extend the payroll tax cut, as did a failed Republican Senate bill.
Yet as it turns out, millionaires on food stamps are about as rare as petunias in January, even if you count a lottery winner in Michigan who managed to collect the benefit until chagrined officials in the state put an end to it.
But the idea of ending unemployment insurance for very high earners — which would be achieved essentially through taxing benefits up to 100 percent with a phase-in beginning for those with gross adjusted income more than $750,000 — demonstrates an increasing desire among members of Congress to find some way to make sure the wealthiest Americans contribute more to reducing the deficit and paying for middle-class tax relief.
Democrats have sought a surtax on income over $1 million to pay for an extension of a tax break for the middle class, which Republicans have rejected. Employees’ share of the payroll tax, now 4.2 percent of wages, is scheduled to rise to 6.2 percent in January unless Congress takes action. The Senate is expected to come back this week with another version of its bill to extend the tax holiday.
On Monday night, the majority leader, Sen. Harry Reid, D-Nev., served notice to congressional Republicans that he would prevent final votes on a must-pass bill to finance government operations until the Democrats get what they want on the payroll tax.
While tycoons on food stamps might be hard to find, some millionaires do indeed pursue unemployment pay when they find themselves out of job.
From 2005 to 2009, millionaires collected more than $74 million in unemployment benefits, according to an estimate by Sen. Tom Coburn, R-Okla., who has paired with Sen. Mark Udall, D-Colo., to push to end the practice.
According to Coburn’s office, the Internal Revenue Service reported that 2,362 millionaires collected a total of $20,799,000 in unemployment benefits in 2009; 18 people with an adjusted gross income of $10,000,000 or more received an average of $12,333 in jobless benefits for a total of $222,000.
“Making Coloradans pay for unemployment insurance for millionaires is frankly irresponsible, especially at a time when money is tight and our debt is out of control,” Udall said in an email.