By Ryan J. Donmoyer
(c) 2010 Bloomberg News
Friday, October 1, 2010; 1:14 PM
After the economy slipped into recession in 2008, millions of Americans received unemployment benefits to make ends meet -- including almost 3,000 millionaires.
According to U.S. Internal Revenue Service data, 2,840 households reporting at least $1 million in income on their tax returns that year also collected a total of $18.6 million in jobless aid. They included 806 taxpayers with incomes over $2 million and 17 with incomes in excess of $10 million. In all, multimillionaires reported receiving $5.2 million in jobless benefits.
Those numbers are a minuscule fraction of the 9.5 million taxpayers who reported receiving $43.7 billion from jobless benefits in 2008, up from 7.6 million recipients reporting $29.4 billion in benefits in 2007. Still, economists said they are surprised so many people with seven-figure incomes claimed benefits.
"It's a larger number than I would have expected," said Alan Viard, resident scholar at the American Enterprise Institute, a Washington research organization. "But, people at any income level can lose their jobs."
The first 26 weeks of unemployment benefits are paid by states. Nationally, benefits average about $300 per week. Because unemployment benefits are insurance, funded with taxes paid by employers, the program isn't need-based like welfare. A millionaire who loses his or her job is entitled to benefits the same as a laid-off factory or restaurant worker, Viard said.
"Getting an insurance payment doesn't depend on need but only on suffering an insured loss," said Roberton Williams, a senior fellow and expert on tax policy at the Urban Institute, another Washington policy research organization. "We don't say that your homeowners' policy shouldn't pay off if you're a millionaire."
Since 2008, the federal government has helped fund jobless benefits beyond the 26 weeks that states pay. The federal aid is scheduled to expire in November. It also lapsed in June and was renewed in July following a battle in Congress, where some lawmakers said it was time to wind down aid and Republicans said it shouldn't be financed with deficits.
Congress in 2009 voted to exempt the first $2,400 of jobless benefits from federal income taxes. The Census Bureau last month reported the country's poverty rate rose to 14.3 percent in 2009, the highest level in 15 years.
In addition to the millionaires, 8,011 households reporting income between $500,000 and $1 million in 2008 claimed jobless benefits totaling $52.8 million, the IRS data show.
In 2007, so few millionaires collected jobless benefits that the IRS said it refused to publish the data for fear their identities could be detected in violation of confidentiality laws. In 2006, nearly 2,000 households reporting more than $2 million in income claimed jobless benefits, including 15 with incomes above $10 million.
No IRS data are available yet for 2009.
Williams said that in some cases where millionaires claim benefits, the recipient may not be in a high-salary job. For example, a chief executive's spouse may lose a teaching job.
"The teacher may not need the money, but collecting the benefits is different from a laid-off CEO collecting," he said.
Still, Williams said the numbers remind him of stories he heard earlier in his career about movie actors who collected unemployment benefits between pictures.
"These were people comparable to your millionaires who clearly didn't need the money but collected it nonetheless," he said.