IRS reveals millionaires claiming unemployment benefits
For most taxpayers, 2008 wasn't a year to remember. As a whole, incomes and profits tumbled while foreclosures and job losses soared. We saw the anecdotal evidence in the headlines and photos splashed across the media. (Meanwhile, unscrupulous Wall Street types took greed and avarice to a whole new level.) Hard data from the IRS backs up what we knew to be the case: The recession hit the country hard. But the numbers also tell a shocking, much lesser-known story: Quite a few millionaires were claiming unemployment benefits, too. So while millions of Americans with struggled to keep their homes and feed their kids, a few thousand millionaires, though in not nearly as bad shape, were on the dole, too.
Giving some super-rich folks the benefit of the doubt, if you will, it appears some of them didn't have such a spectacular 2008. Seventeen of those 13,480 taxpayers who reported income of more than $10 million found themselves standing in the unemployment lines alongside nearly 9.5 million other Americans in 2008. Unemployment benefits for those taxpayers averaged $5,765. The number claiming unemployment benefits increased to nearly 3,000 for those taxpayers who reported overall income of more than $1 million.
Of course, unemployment benefits were up across the board -- nearly 25% -- at all income levels. The super poor to the super rich reported a collective total of $43.7 billion in unemployment benefits.
While those statistics may stand out merely because of the staggering amount of income involved, it's interesting that the overwhelming share of income in the top tax bracket isn't related to wages or salary. Less than 20% of the income at the top is attributable to actually working. The lion's share of income for those taxpayers at the top comes in the form of capital gains income -- even in a down economy. Lucky for those taxpayers, capital gains is generally tax favorable.
As Congress struggled this year with whether to extend benefits for those who are unemployed, questions about who should be able to claim benefits (and under what circumstances) took center stage. These taxpayer stats -- the first time the IRS has provided this level of detail on taxpayers in higher tax brackets -- will likely raise those questions again. Specifically, the discussions will revolve around whether it is fair for the super rich to claim unemployment benefits.
The rules for collecting unemployment are surprisingly easy in most states. To qualify, you generally have to earn sufficient wages (yup, the millionaires did that), suffer a job loss through no fault of your own, and meet certain criteria moving forward (usually making yourself available for work). There's no upper limit on the amount of money you can make to otherwise claim unemployment. In other words, you can't make too much money to collect; ironically, you can make too little money to claim unemployment.
The numbers of those unemployed taxpayers added to the overall grim economic picture for 2008. The IRS statistics show that total income reported on tax returns for 2008 was $8.3 trillion, a decline of nearly 5% from 2007. Factoring in the cost of inflation, the real drop was 8.4% -- the biggest dip in income in 20 years.
Even those in the top tax bracket took a hit -- there were fewer super-millionaires in 2008. Those reporting income of more than $10 million tumbled 25% to just 13,480.
The number of taxpayers reporting at least $1 million in income also dropped. Overall, the number of millionaire wage earners took a tumble of nearly 22%. The total income reported by those millionaires was a whopping $1.08 trillion, or about 13% of all income.
Even as millionaires garnered unemployment, they also reaped Social Security benefits, too. Nearly 57,000 taxpayers who reported more than $1 million in income in 2008 also collected Social Security payments. Taxpayers who pay into the Social Security system are entitled to payouts at certain ages. As the trust fund depletes (with concerns that it will run out at some point between 2040 and 2080), many believe that Social Security distributions should be income dependent.
All this makes me wonder: Should any government benefits be income dependent? Or should you be allowed to receive benefits irrespective of your income level?
For more information about income levels and classes of income, check out the Tax Statistics page on the IRS website.
AP
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Reader Comments (Page 1 of 8)
7-30-2010 @ 3:19PM
RMI said...
I'm self employed guess what? NO BENEFITS PERIOD! There are millions of free lance and self employed who are completely unprotected!!!
Reply
7-30-2010 @ 4:54PM
dean said...
"Unprotected"?? Are you an idiot?? If you want "safety" get a job with benifits. You are self employed nd want all the benifits of "self employed" like cheating on your taxes, working in your underware and now you want "goof off job" insurance. Get real....
7-30-2010 @ 5:22PM
Rebecca said...
Dean, i work for myself at home, mostly because when my son was in daycare, all the money i made would go to daycare. I am a single parent who gets NO support from my ex. I work HARDER than just about anybody i know to make things happen, much harder then ppl who don't care because they're earning the same wage either way. I bust my butt and feel that i deserve the benefits that other ppl get when i'm having to struggle to get though a hard period, too. PS-i do work in my underWEAR, not underware, and do NOT have a "goof-off job, nor do i cheat on my taxes, thank you very much!
7-30-2010 @ 9:10PM
Jeff said...
Well what Dean does not understand is that self employed people, like myself, have seen their incomes drop by over 80% since 2005, and I still work up to 7 days a week generally, all hrs of day, have an office, and bills to keep things going. As a self employed person I also pay into social security, medicare, disability, workers comp, and into unemployment, but I do not qualify for any of these. I also pay out of pocket $1,500 a month just to have health insurance, but dont use it. I may qualify for social security in about 25 years when I might retire, and have been paying into social security for 30 years now, so will have a 55 year contribution, but I am sure it will be long gone. The self employed are the go getters and doers of the nation, not the folks who expect to get entitlements from the govt. for doing jack, and especially the politicians who cant make it in the real world, so they milk the system they dont contribute to. Work for someone else, and you may get by, work for yourself and you have far better chance of happiness.
7-30-2010 @ 7:44PM
TPR said...
You need to s-corp your business. You pay your self a wage, pay the social security, medicare and unemployment benefits
and then you can get these benefits
7-31-2010 @ 10:45AM
Beth said...
It's also possible to work as an employee at home. That's what I have done for 10 years. I am not rich, but I do make $30K working 4 hrs a day so I can do my other job (taking care of my home/family). The internet has opened up so many REAL jobs that can be worked from home. BestTopJobs has a FREE list of hundreds of real work at home jobs offered by well known companies. These jobs do NOT cost you money. These are employment positions.
7-31-2010 @ 12:08PM
Fed up said...
RMI, you are 100% correct! I am also a self employed business owner and we all are required to pay our taxes no matter who you work for. Keep in mind that the self employed/business owners get the delight of paying additional 7-8% in taxes yet we are not "qualified" to reap the rewards of certain government programs. It doesn't matter if you earn $0 dollars in a given year, (basically unemployed) you do not qualify for unemployment. What's wrong with that? We pay for it but cannot use it. What it really is; it's politicians deciding what we pay and who gets the rewards.
I fully support the fact that these so called millionaires are able to collect unemployment and social security. The facts are that if you pay into the Social Security system over your lifetime you are ENTITLED to your benefits. Yes I said entitled, thats the only time you will ever hear me say that but it is your asset. It doesn't matter if you make $50k a year or $50 million a year they both paid into social security over their lifetime. The whole idea of some politician deciding who should or should not get benefits that you paid into your entire working lifetime is absolutely insane. If that was the case then the same argument could be made that if someone (and there are millions) sat on their butt their entire life collecting food stamps and other forms of government assistance then they should not be eligible for social security benefits because they did not pay into the system. I am talking about the lazy people not the amall percentage of the population that truly needs assistance. I am all fo helping thos folks.
I guess my point is that yo cannot take from one group of people and give to another group of peole because someone says it's right.
At this rate, I see the USA in the same shape as Greece in about 10 years. God help us all!
7-31-2010 @ 1:15PM
Steve said...
Quit complaining. Either get a job with UI benefits or save your money for retirement and hard times. How can you make a life choice and then complain to others that you made that life choice?
7-30-2010 @ 3:56PM
Holly Marcyoniak said...
SINCE WHEN, ISN'T THERE A LIMIT ON HOW MUCH IS EARNED IN ORDER TO QUALIFY FOR UNEMPLOYMENT???????
THERE HAS ALWAYS-----BEEN-----WHAT HAS OBAMA & HIS HENCHMEN CHANGED THAT TOO ?????
Reply
7-30-2010 @ 5:00PM
Patty said...
You are a no-brain twit.
"you generally have to earn sufficient wages (yup, the millionaires did that), suffer a job loss through no fault of your own, and meet certain criteria moving forward (usually making yourself available for work).
These rules apply to everyone applying for unemployment and are the same as when I did 30 years ago.
Your screaming (cap letters) doesn't make your make your comment true, just hysterical.
7-30-2010 @ 5:11PM
Patty said...
The fact you can vote scares the heck out of me.
This is a ceiling on how much you can collect. A fact you can find very simply.
7-30-2010 @ 11:35PM
ajschrod said...
Why would Obama (or any Democrat) support benefits for wealthy people? They're supposed to be "socialists", don't you know: like Robin Hood-- King John is not eligible!
8-01-2010 @ 11:59AM
lynn said...
Come up something better than blaming obama! You PWT must have such miserable lives you hate yourself!
8-01-2010 @ 5:45PM
Coach said...
Holly: no change in unemployment; If your firm pays in on the first 6400.00 that you earn, regardless of your total salary, you are eligible for unemployment compensation. The employee pays zero on UC. However, if you make over 25,000 income per year, you do pay tax on your eunemployment; Obama ahs changed nothing
8-06-2010 @ 9:22AM
godblshu said...
I have a CPA firm which has high income clients. The economy is so bad that many of these clients are earning no money, but are very wealthy insofar as assets is concerned. One client is accustomed to earning $800,000 profit per year in the construction business, but is nearly bankrupt because they can't sell any of their real estate.
Reply
7-30-2010 @ 4:05PM
Jim said...
I cannot figure out why people love to blame the rich and successful. Isn't that what everyone wants to become? There is a certain race, that NEVER tips or donates to charitable causes and maintains that they should receive charity instead. But when they become rich and successful, they still do not donate to charity, unless of course, they get elected President, then they begin donating generously. You shouldn't come down so hard on the rich, just because they've gotten a free ride to Harvard, never held a real job and what not, like the President.
Reply
7-30-2010 @ 4:28PM
boycott tysons said...
well now do we have another of those racist rabid right republicans here? Yep folks I dare say we do.........................................
7-30-2010 @ 4:47PM
Terry said...
What an idiotic and bigoted post. As if we didn't know what segment of the population you are referring too. I'm sure you have statistics to back up your half-baked claims.
7-30-2010 @ 4:52PM
youvebeenduped said...
Jim - Why don't you just carry a sign around saying "I am a bigot".
7-30-2010 @ 4:59PM
marc said...
Jim, you are sadly mistaken. I drive a truck, and people of color in some of the worst areas hand me tips. Then in some of the richest areas I hand someone a gift basket at Christmas, not a dime. In fact it got so bad I stopped delivering them. It's just a matter of class: my parents taught me don't ever let a delivery person go without one. Except Fed Ex and UPS because they are everyday. But around the holidays they get tips too. My parents consider someone who doesn't a very low class person. Seems like nowadays people think it's ok not to.
MARC