Question

The Federal government has a requirement that unemployment insurance beneficiaries pay income tax on their unemployment benefits. Explain what effect you would expect this taxation of EI benefits to have on the unemployment rate

Answer 1

Unemployment insurance or benefit is under income tax then country have huge number if unemployment people they have to pay tax .for which government have to give employment to many empoyee to do this work of taxation collection, it's days storage and other file work.

Taxation income will be used as expenditure in economy and which will again Created some employment indirectly. As unemployment insurance to unemployed person will give a fixed income to so many people and after taxation they become legal and also partial employment people of government .So in all of these sense unemployment rate will decreases. As insurance market also flourishing, thus this will surely create employment and thus helping to reduce unemployment rate.