The tax reform plan unveiled last month by Senate leaders has not reappeared in public since, prompting all sorts of speculation about battles behind the scenes to change it.
One provision in the Senate proposal would temporarily exempt up to $4,800 in unemployment benefits from state income taxes. The federal stimulus package exempts $2,400 in benefits from federal tax in 2009.
Regardless of what happens to the other provisions in the Senate tax package, the exemption for unemployment benefits needs to pass.
An issue brief from the Oregon Center for Public Policy explains in detail why it’s so important, and a headline in the report sums it up. “Taxing unemployment benefits undercuts the goals of the program.”