TPC estimates HEROES Act would substantially cut individual income taxes . TPC’s Howard Gleckman highlights the numbers from TPC’s analysis of the House-passed Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act. Nearly all households would receive a tax cut, averaging about $3,300. The biggest average benefits as a share of after-tax income would go to low and moderate-income households. For most, the biggest benefit would come from a new round of recovery rebate payments that would supplement the direct payments included in the recently enacted CARES relief package. On average, households would get a recovery rebate of $2,060. Two- thirds of that benefit would go to those making $91,000 or less.
If past is prologue, state and local budget problems will slow economic recovery for years. The Wall Street Journal reports (paywall) that state and local government spending accounts for almost 11 percent of Gross Domestic Product. Those governments, which employ one of every eight American workers, cut 1 million positions in April due to the coronavirus crisis. Moody’s Analytics estimates state and local governments will need to cut an additional $500 billion in spending over the next two years. Harvard’s Gabriel Chodorow-Reich estimates that every dollar they cut would reduce overall economic output by $1.50 to $2.00.
More Paycheck Protection flexibility. The House will vote this week on a bipartisan bill to give businesses more flexibility in how they use funds from the Paycheck Protection Program. The bill would give businesses 24 weeks to spend the loan instead of eight weeks. The legislation also would allow businesses to spend more than 25% of their loans on non-payroll expenses such as rent and utilities. The Senate, which is out of session this week, is expected to approve its own version when it returns.
Eighty-three percent of publicly traded firms that took PPP loans kept them. A total of 424 public companies received $1.35 billion. Just sixty-eight firms returned $435.8 million because they had resources to get by on their own. Reuters reports that 76 public companies that have hung on to the loans had enough cash and cash equivalents to cover operating costs until at least June. Twenty-two received loans of at least $2 million.
Tomorrow on the Hill, virtually. The House Ways & Means Committee will hold a video hearing on the disproportionate impact of COVID-19 on communities of color at noon Eastern Time. Witnesses will include Douglas Holtz-Eakin of the American Action Forum.
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