Round Three of the stimulus is going to take a little longer. The Trump Administration and GOP congressional leaders seem far from any agreement on how to get money to individuals in response to the pandemic. The Washington Post reports that some in the Administration would to give low-income households smaller payments than those with higher incomes. Treasury Secretary Steven Mnuchin says $1,000 payments will go to all taxpayers but also says they would go only to the “middle-class on down.” Some Senate Republicans reportedly oppose any direct cash payments. Separately, Trump said yesterday he might support government taking an equity stake in firms that receive bailouts.
What does Mitch McConnell want? Despite the squabbling, the Senate GOP leadership is circulating its own bill. It would provide cash payments up to $1,200 per adult and $500 per child for taxpayers making up to $75,000 and couples making $150,000, when it would begin to phase out. Those with very low incomes who don’t pay taxes would get up to $600. The measure also would allow businesses to delay corporate income tax payments and the employer share of payroll taxes, and revise rules for net operating loss carry-forwards. A copy of the bill is here.
What do Democrats want? House Democrats have been quietly drafting their own plan. Senate Democratic leader Chuck Schumer says his caucus wants bigger government payments, more family leave, more funding for unemployment benefits, and more money for public health.
Sanders would raise taxes by $23 trillion over 10 years. TPC finds that Bernie Sanders’s tax proposals would boost federal revenue by about $23 trillion over the next decade—about 8.5 percent of Gross Domestic Product. His Medicare for All-related taxes would account for $13.4 trillion of that. As a share of the economy, his plan would result in the largest tax increase in US history. The top 1 percent of households would pay nearly two-thirds.
About that filing deadline. Treasury’s decision to let people delay their balance due income tax payments until July 15 but still require them to file by April 15 is getting more pushback. The Senate leadership stimulus bill would push back the filing deadline and Ways & Means Committee chair Richard Neal also has asked Treasury to delay the deadline. Accountants and tax preparers are pushing hard for the change. Time is growing short, but we haven’t heard the end of this.
States and cities face severe budget shortfalls. Governing considers the situation for local governments, noting “nearly every type of government revenue, including income, sales and gas taxes, will take a hit. Well-funded rainy-day funds should help."
To wit: The novel coronavirus requires novel state solutions. TPC’s Donnie Charleston warns that “As the crisis progresses, state leaders may be inclined to follow the federal government and turn to traditional fiscal mechanisms to address this challenge. However, a pandemic doesn’t have the same implications as a natural disaster or a financial crisis. As a result, many of the traditional strategies to address those challenges may be of little use, and localities may need to think outside the box for ways to manage today’s economic slowdown.”
Like the federal government, states are beginning to delay their tax payment deadlines. States including Louisiana, Maryland, Michigan, and Minnesota are adjusting their tax deadlines in response to the coronavirus pandemic. Bloomberg Tax offers a running list here.
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