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- Category: Tax Law
The House aims to vote this week on its $1.9 trillion stimulus plan. The package includes nearly $600 billion in tax cuts for low- and moderate-income households, including another round of recovery rebate direct payments to individuals and expansions of the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC). It also includes $350 billion in general support for state and local governments plus an additional $130 billion for schools, and an increase in the federal minimum wage from $7.25 to $15 per hour, phased in over four years. The package will pass in the House this week. Some version likely will pass the Senate, where Democrats hold a bare one-seat majority, in late February or early March. The minimum wage increase is most likely to be dropped or revised in the Senate.
Biden is working on a second bill. While Congress has not yet passed the relief plan, the Biden Administration is already at work drafting a trillion-dollar-plus stimulus plan. Its centerpiece is likely to be a major infrastructure initiative.
Should the IRS or the Social Security Administration (SSA) distribute a monthly child benefit? TPC’s Elaine Maag considers which of the agencies should administer a monthly or quarterly payment for a refundable CTC or child allowance. Elaine explains that each agency has both advantages and disadvantages. She concludes that “over the long-term SSA’s flexibility and its experience delivering monthly payments might make it the better agency to deliver a regular child benefit. But if lawmakers want to stand up a program quickly, IRS seems like the better bet.”
What are we learning about firms that received PPP loans in 2020? TPC’s Aravind Boddupalli reviews new data from January 2021 that reveal which firms benefitted the most from the 2020 round of Paycheck Protection Program loans. They offer key lessons for the current round of loans.
Increase the childless EITC, but include students too. The House EITC provision would provide substantial benefits to workers without children at home. TPC’s Elaine Maag urges Congress to make low-income, independent post-secondary students eligible as well. In a recent analysis, Elaine and her colleagues found that extending EITC benefits to these students would help shore up their finances and help them stay in school.
Tech firms sue state of Maryland over its online advertising tax. Last Thursday, Silicon Valley lobbying groups filed suit against Maryland. They argue that the state’s new tax on online advertising revenue is unfair, unconstitutional, and incompatible with a federal law that prevents states from targeted taxing of online services. Policymakers are watching closely: The tech industry’s profits in the past year make it a very attractive source of potential tax revenue in pandemic-ravaged economies. But federal law seems to favor tech.
ProPublica takes a deeper look what IRS’s paperwork backlog means for lower-income tax filers. As of Jan. 29, the IRS had not yet processed 6.7 million individual returns for the 2019 tax year. That has resulted in long waits for refunds and a second stimulus payments… as well as stress-inducing late notices for payments that tax filers sent but the IRS has not yet processed. Low-income filers have less access to help with such issues: As of Feb. 1, 78 out of the IRS’ 358 taxpayer assistance centers remained closed.
Long-time Tax Policy Center supporter Alan Dworsky has died. A highly-respected member of TPC’s Leadership Council, Alan died in January at age 90. He and his wife Suzanne Werber Dworsky created the Popplestone Foundation in 2000. Besides supporting TPC, the foundation helped fund a wide range of environmental, social justice, educational, and music organizations.
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