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In the olden days, they didn't. Then they changed it in the 80's. Same way that social security wasn't taxed and now it is when you make more than they think you should. The only reason is just to get more tax money, and over time people will forget how it used to be. Just accept it.
Since unemployment is looked at as a mandatory EMPLOYER PAID benefit, it's considered taxable income just like if your employer provided private disability insurance that they paid for.
Your government at work! For us, as soon as we needed unemployment it was taxed. When we got an inheritance it was taxed but several years later that was changed so it would have been more favorable for us, the little guy! A day late and a dollar short!
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Whether your income is from working or from sitting at home collecting unemployment, you are still receiving the same benefits of the government programs such as national defense, department of education, highways.
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