The Impact of Tax Cuts and Covid-19 Laws on Unemployment Benefits: Reducing Reportable Income and Its Consequences

The Impact of Tax Cuts and Covid-19 Laws on Unemployment Benefits: Reducing Reportable Income and Its Consequences

Introduction

Background information on the history of unemployment benefits and tax laws

The idea of unemployment advantages is not new as it dates to the early twentieth century, whilst numerous states within the United States started out offering brief economic help to people who misplaced their jobs. However, the unemployment coverage machine as we understand it nowadays turned into mounted in 1935 with the passage of the Social Security Act (Bitler et al.). The machine has gone through numerous modifications over the years, which includes modifications in eligibility requirements, advantage amounts, and the period of advantages.

Overview of the impact of the 2017 Tax Cuts and Jobs Act (TCJA) and Covid-19 laws on unemployment benefits

The TCJA of 2017 turned into a chief overhaul of the American tax system, with great implications for people and businesses. One of the provisions of the regulation turned into a discount in tax quotes for people and corporations. The regulation additionally made modifications to the remedy of unemployment advantages, decreasing the quantity of profits that should be suggested on tax returns (Auerbach et al.).[1] Additionally, the Covid-19 pandemic and the ensuing financial downturn caused the passage of numerous legal guidelines that furnished extra aid to people who misplaced their jobs, along with multiplied unemployment advantages and prolonged period of advantages.