Catholic University Law Review


The article examines the policy of taxing long-term unemployment. We claim that tax systems should not tax the unemployed regardless of whether they reenter the labor market. Unemployment is a socioeconomic problem. The fear of expanding unemployment increases due to COVID-19 that shut down large sectors of the economy for a long period and also due to the digital economy. As early as the 1930s, Keynes expressed his fear of the economic challenges his grandchildren's generation would face, coining the term "technological unemployment." Several contemporary economists substantiate this fear by showing that some occupations are bound to disappear. Unemployment insurance is part of social law aimed at granting financial security during unemployment. This article focuses on security benefits paid out of unemployment insurance programs to unemployed who become chronically so. In many countries it is common to tax unemployment benefits, but tax laws do not distinguish between short-and long-term unemployed taxpayers. Given that the future of the occupational security of the unemployed is dubious, taxation should take into consideration the future "dimension" of equity. In order to assess the proper taxation of the long-term unemployed, the article adopts the reciprocity principle, which is reinforced by lifecycle theory. Equity cannot be measured over a single year, but over a longer period, during which we should examine whether the unemployed has become chronically so–one who cannot find a job even after exhausting his rights to unemployment insurance. The article proposes three taxation periods reflecting reciprocal relationships between a taxpayer and society–employment, regular unemployment, and chronic unemployment–and the reciprocity between two adjacent periods is then examined. Since unemployment insurance programs are well rooted in many countries, the article's recommendations are practically universal.