Unsung: House passes $3 trillion HEROES Act. The lower chamber passed the bill on Friday by remote vote. The Joint Committee on Taxation estimates the bill’s tax-related provisions would reduce federal revenue by $883 billion between fiscal years 2020 and 2030. Nearly half the cost would come from a second round of direct stimulus payments, which would cut federal revenue by $413 billion in 2020-2021. Senate GOP leaders say they feel no urgency to act on their own bill before their Memorial Day recess.
The world economy is reeling. IMF Managing Director Kristalina Georgieva told a Politico virtual event on Friday that the world economy may not fully return to pre-COVID-19 levels until 2023. She said the economies of 170 countries have been contracting since March and predicted the global economy will shrink even more than current IMF estimate of -3 percent in 2020, before a “partial recovery” in 2021. Her very un-IMF like advice for hard-hit countries: “Spend as much as you can, and then spend a bit more for your doctors, for your nurses, for the vulnerable people in your society.”
Floating business tax cuts: White House economic adviser Larry Kudlow suggested to Fox Business that “maybe the corporate tax rate of 21 percent should be lowered…to about 10.5 percent for corporations who are coming back home.” The House Ways & Means Committee’s top Republican Kevin Brady is considering a “return to work bonus” to help businesses and a tax credit to offset the costs of protective gear and related expenses. House Republicans also are working on a tax incentive to encourage production of drugs and other critical supplies in the United States—a key demand of President Trump.
As for Treasury’s economic impact payments… Some Americans worry they haven’t received their $1,200 payment because they owe back taxes or their tax returns are under audit. But TPC’s Howard Gleckman explains that some stimulus payments are being held up instead because the IRS discovered a tax return anomaly such as a Social Security number that didn’t match its records or discrepancies in a child tax credit claim.
And in Seattle: Amazon tax squabbles continue. Last week the Seattle city council continued to struggle over a “Tax Amazon” proposal. In 2018, the council passed then repealed a tax on large employers. The bill’s sponsor, Kshama Sawant, reintroduced the bill in February. But in the wake of the pandemic, a new state law allows local councils to meet only to debate COVID-19 related legislation. So Sawant subsequently modified her bill to include COVID-19 relief payments. The council halted debate on the measure anyway. Sawant calls that illegal. Her latest version allows the city to borrow money to fund $500 payments to Seattle residents. After the pandemic is over, the tax would fund affordable housing and Green New Deal policies.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at email@example.com.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2020.