- April 6, 2020
- Posted by: detaxify
- Category: Tax Law
On to Coronavirus Stimulus #4. Speaker Pelosi wants the House to consider a fourth bill by the end of the month. She and other Democrats suggest it would look a lot like #3, with more assistance for state and local governments, health care including hospitals and medical workers, and first responders. It likely also would include more money for small businesses and, perhaps, individuals. Senate Majority Leader Mitch McConnell says he wants to go slow on a fourth bill.
Blueprint for that bill. TPC’s Bill Gale argues that the fourth phase of relief should include “continued fiscal support to allow people to continue to comply with public health mandates; additional specific support for renters and mortgage payers; an expanded social safety net; and more fiscal assistance for state and local governments, which are bearing much of the burden of managing the current pandemic.”
What about the SALT cap? Hill Democrats from high-tax states want Pelosi to include repeal of the Tax Cuts and Jobs Act’s $10,000 cap on the state and local tax deduction. But other Democrats say high-income households would get most of its benefits. TPC analysis confirms this.
How low-income workers without children could get coronavirus rebates. Most people will have to file an income tax return for either 2018 or 2019 to receive cash rebates from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. TPC’s Elaine Maag explains that low-income workers who do not live with children have had little incentive to file returns since they get little or no benefit from the Earned Income Tax Credit. But they have one now. Says Elaine: “The best advice for these workers is to file an income tax return for 2019 as soon as possible.”
What about low-income Social Security beneficiaries? TPC’s Janet Holtzblatt describes Treasury’s challenges as it tries to get rebate checks to these retirees. The CARES Act said they’d get payments automatically. But to speed distribution, Treasury said Social Security beneficiaries who have not filed federal income tax returns for 2018 or 2019 would have to file a “simple” return to get their coronavirus rebates. Then, it reversed course and announced it would automatically send money to non-filing beneficiaries. Janet concludes: “Given the challenges in setting up a system of automatic payments, I suspect that Social Security recipients will get their payments sooner if they file a tax return immediately.”
Those who don’t will have to wait. TPC’s Howard Gleckman argues that Treasury’s latest choice creates a difficult trade-off. Without returns from all Social Security recipients, the IRS must through three billion Form 1099 information returns for Social Security benefit payment information, then match them to those retirees who already have filed tax returns. “More Social Security beneficiaries [will ultimately] get payments,” Gleckman explains, but “it will slow payments to all low-income seniors who have not filed tax returns.”
In Washington State: Municipalities can levy only flat rate income taxes. The Washington State Supreme Court on Friday declined to hear arguments over the constitutionality of Seattle’s effort to impose a 2.25 percent tax on incomes over $250,000. The Friday ruling is “the end of the road for this piece of legislation,” said Seattle City Attorney Pete Holmes. The High Court upheld an appeals court ruling that said the city could impose an income tax, but it has to be uniform across all tax brackets.
And now for something not quite completely different: How one parent home schools tax policy. The Tax Hound reviews her first week trying to teach children sent home in response to COVID-19. She taught tax policy to neighborhood 8-15 year olds trying to learn remotely and got some notable insights into sin taxes and income tax rate structures.
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