Rationale

Rationale

until the 1980s, unemployment compensation payments were not taxable. The rationale was that people who were collecting unemployment did not have the ability to pay taxes, just like people collecting welfare payments. In the 1980s, there was a change in the tax law which made unemployment compensation payments taxable. Unemployment compensation varies across states but tends to be a subsistence amount, so does this change make a difference? As you’ll learn, the standard deduction and exemption allow low incomes to avoid taxation, so why make this change to the taxation of unemployment compensation payments? What rationale/concept do you believe could justify this change? Please use an outside source and provide the link

 
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