Extending $300 Federal PUA

The American Rescue Plan Act (ARPA) extended federal pandemic unemployment assistance (PUA) benefits that provided taxpayers with a supplemental weekly unemployment benefit payment (in addition to state-level benefits). Under the ARPA, taxpayers can continue to receive an additional $300 weekly benefit through September 6, 2021. The federal assistance has also been extended to self-employed taxpayers who would not normally be entitled to state-level unemployment benefits.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about continuing to extend the federal supplemental benefit into 2021, as states focus on reopening their economies.

Below is a summary of the debate that ensued between the two professors.

Their Votes:

Bloink

Byrnes

Their Reasons:

Bloink: This weekly benefit has kept countless hardworking Americans out of poverty during the pandemic. It's helped them keep food on the table and prevented the widespread economic collapse that many predicted was inevitable last Spring, when the pandemic first struck. In reality, most families can't get by on standard weekly unemployment benefits for a long period of time--and we still don't really know when things will return to normal. Extending this benefit makes complete sense in light of the continued uncertainty that many families continue to face.

Byrnes: This extra benefit might have been useful in the spring of 2020, when we didn't know what we were dealing with. We now have a firm enough grasp on the issues. All this across-the-board benefit does is discourage people from returning to work when they're fully capable of gaining employment. The new reality is that it's time to get people back to work. The vaccine is working. Sure, not everyone has access yet--but we shouldn't be expanding unemployment benefits at the exact time when we need to be encouraging a return to work.

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Bloink: The economy cannot recover if Americans are unable to sustain even their basic cost of living needs. Job opportunities that existed prior to the pandemic simply have not returned across the board—and we don’t know when they will, as uncertainty over the vaccine continues. Business owners who are able to reopen are operating at reduced capacity. Many have no choice but to bring back only a shell workforce—and many workers have a legitimate reason to stay home even as their employers choose to reopen.

Byrnes: The federal supplement made sense during a time when most businesses were shut down and we were encouraging all Americans to stay home as much as possible. That point has passed, and it’s time to begin directing federal dollars toward return-to-work incentives.

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Bloink: Return-to-work incentives have their place, but hardworking Americans continue to struggle as unemployment remains at record-high levels. A return-to-work benefit does very little to help when there’s no work to return to—and employees shouldn’t have to choose between protecting their health and earning a living. We also have to remember that some states struggled in implementing this across-the-board supplemental benefit. Asking them to switch over to a new system is not a viable option while a record number of Americans remain out of work.

Byrnes: We need to give Americans an incentive to return to the workplace, not support financial gain for those who choose to stay home. I’m not suggesting that the federal aid be removed from the picture entirely—just that it be administered on a more selective basis. One solution might be to calculate the unemployment benefit on a case-by-case basis, based upon the employee’s average pay prior to being laid off.