Can the GOP be tough on the rich? How about no food stamps?

The White House on Thursday rejected as insubstantial a GOP proposal to curtail unemployment insurance and food stamps for the rich as an offset for extending the payroll tax cut.

By , Staff writer

Who says Republicans can’t be hard on millionaires and billionaires?

On Wednesday, Sen. Dean Heller (R) Nevada proposed means testing of the ultra-rich for eligibility for unemployment insurance and food stamps as well as raising their Medicare premiums.

The income garnered by keeping people like Warren Buffett from using the SNAP program (food stamps) would be part of an effort to pay for a one-year extension of the 2 percent payroll tax cut, which will cost over $120 billion.

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In fact the US Department of Agriculture already does require means testing in order to receive food stamps.

On Thursday, White House press spokesman Jay Carney called the Republican proposal “gorilla dust.”

Washington observer Peter Davis, a former congressional staffer who writes a blog, Davis Capital Investment Ideas, says the legislation is a very “cosmetic” offset to a $122 billion payroll tax cut.

In an interview, Stewart Bybee, a spokesman for Senator Heller says the purpose of the anti-millionaire legislation is to “preserve taxpayer funds for those who need it the most.” He adds, “Millionaires and billionaires I think can sustain their lifestyle without taking unemployment compensation.”

According to IRS data in 2009, some 2,353 households that reported $1 million in income collected a total of $20.7 million in unemployment compensation. Some 716 households that reported making $2 million collected $6.67 million in income, while 18 households reporting $10 million in income collected $222,000 in unemployment.

But, actually keeping people like Bill Gates or Jamie Dimon, the chairman of J.P. Morgan Chase, from collecting unemployment benefits might be difficult.

The companies they work for pay into the unemployment insurance fund. Thus, unemployment insurance is an insured benefit.

“Unemployment insurance is completely based on the concept that taxes were paid on your wages and when you lose your job, you are being insured against the loss of your income,” explains George Wentworth, who works for the National Employment Law Project (NELP), which lobbies for the jobless. “You have the right to unemployment insurance you earned through your work history.”

As Mr. Wentworth notes, “If you happen to be an employee and earn $1 million, taxes are getting paid on those wages.” But, he adds, “probably that category of employee has a lesser chance of being unemployed.”

Even if Congress can change the rules, state unemployment offices only keep a record of wages earned, not assets, or the sale of say a few million shares of stock. If Microsoft reported billionaire Mr. Gates received $20,000 in wages, he might be eligible for unemployment unless the government examined his income tax returns to look for capital gains and other non-wage sources of income.

In fact, some government means testing already takes place, including for SNAP. According to the Department of Agriculture web site, only people with incomes below 130 percent of the poverty level can collect food stamps. They also can’t have more than $2,000 in “countable resources,” such as a bank account, unless they are disabled, or be over 60 years old, in which case it is $3,250.

In an email, Stewart Bybee, a spokesman for Sen. Heller says the purpose of the proposed legislation with regards to the SNAP program is to protect the taxpayers from abuse.

Of course, a lot of the top 1 percent don’t actually get paid an actual wage in the tradition sense. They might be sole proprietors or partners in a business, neither of which meet the Department of Labor’s definition of an employee.

In fact, Wentworth who worked for a state unemployment agency for thirty-five years, says millionaires and billionaires collecting unemployment “is not a burning problem within the unemployment system.”

[Editor's note: The original version of this blog misspelled Warren Buffett and Jamie Dimon.]

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