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[Congressional Record Volume 155, Number 7 (Tuesday, January 13, 2009)]
[Extensions of Remarks]
[Page E69]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

               INTRODUCTION OF WORKER RELIEF LEGISLATION

                                 ______
                                 

                          HON. JOHN M. McHUGH

                              of new york

                    in the house of representatives

                       Tuesday, January 13, 2009

  Mr. McHUGH. Madam Speaker, on January 6, 2009, I introduced three 
measures that are designed to provide relief to millions of unemployed 
American workers. These proposals are H.R. 155, the Suspension of 
Federal Income Tax on Unemployment Benefits Act of 2009; H.R. 154, the 
Workers Severance Tax Reduction Act of 2009; and H.R. 153, the Worker 
Savings Account Act of 2009.
  From December 2007 to December 2008, the national unemployment rate 
has risen from 4.9 percent to 7.2 percent and 2.6 million jobs have 
been lost. In fact, from November 2007 to November 2008, the number of 
those seeking work has risen in 49 States and the District of Columbia, 
including New York, which has seen its rate increase from 4.6 percent 
to 6.1 percent during that time. As of November 2008, in New York's 
23rd Congressional District, which I have the privilege of 
representing, 9 of my 11 constituent counties had unemployment rates 
that significantly exceed the national rate. With my support, the 110th 
Congress enacted legislation (P.L. 110-252 and P.L. 110-449) to provide 
up to an additional 20 weeks of unemployment benefits to workers who 
have exhausted their 26 weeks of regular benefits. However, there is 
more we can and should do to help those without a job.
  In the first instance, we should enact H.R. 155, the Suspension of 
Federal Income Tax on Unemployment Benefits Act of 2009. Many Americans 
are unaware that they must pay Federal income taxes on any unemployment 
compensation benefits they might receive. This has not always been the 
case; between 1979 and 1986, those payments were excluded from Federal 
income taxes. It is time to once more provide this relief to unemployed 
Americans, which could provide up to $117 in additional income to the 
average beneficiary. In this manner, Congress can both help those 
individuals who are most in need and inject billions of dollars into 
the economy through paid rents, mortgages, utilities, groceries, and 
other necessities.
  We should also enact H.R. 154, the Workers Severance Tax Reduction 
Act of 2009, which would allow laid-off workers to exclude up to 
$40,000 from any severance pay, provided that it is less than $150,000 
and is received between December 31, 2007, and December 31, 2010. 
Studies have indicated that roughly 60 percent of businesses offer 
their employees some kind of severance pay. While these totals can vary 
from business to business, in many cases it is remitted as a lump sum. 
Unfortunately for many workers, the IRS takes a substantial bite out of 
these benefits. Specifically, under current law, severance pay is 
treated as regular income, thus often driving people into higher tax 
brackets at the very time they are losing their jobs.
  From the start of the current economic slump in December 2007 through 
November 2008, there have been 20,712 mass layoffs involving nearly a 
quarter of a million Americans. While not all of them received 
severance pay, those who did needed all those monies to better support 
their families, go back to school, or otherwise find a new job or 
career. Congress can and should help these citizens during this 
difficult time by allowing them to retain more of these much-needed 
monies.
  Finally, to help Americans enhance their personal safety nets, 
Congress should enact H.R. 153, the Worker Savings Account Act of 2009. 
This measure would allow people to establish Worker Savings Accounts 
(WSAs) to supplement the benefits they might otherwise receive while 
unemployed.
  Like traditional Individual Retirement Accounts (IRAs), WSAs would 
have an annual contribution limit of $5,000, indexed to inflation. 
However, employers would be able to provide matching contributions of 
up to $5,000 annually. Contributions to WSAs would be permitted until 
the account owner actually elects to take Social Security retirement 
benefits. At that time, WSA account holders could choose to rollover 
their WSA funds into a 401(k) or IRA; alternatively, the WSA funds 
could be withdrawn without penalty but subject to taxation. Prior to a 
WSA account owner's decision to take Social Security payments, WSA 
funds could be withdrawn without penalty and tax-free as long as 
employment was lost through no fault of the worker or they had become 
disabled.
  To encourage lower-income Americans to take advantage of the 
opportunity to contribute to this benefit, the Worker Savings Account 
Act would provide a refundable tax credit of up to $1,000 for eligible 
individuals. This tax credit would be indexed to inflation and 
recipients could receive up to $5,000 over the course of their career.
  Madam Speaker, by enacting the three bills described above, the 111th 
Congress can help millions of unemployed Americans. Accordingly, I ask 
my colleagues to work with me to enact these important measures.

                          ____________________
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