Senate Republicans disclose elements of their stimulus plan. The GOP has begun releasing details of its $1 trillion White House-backed proposal. Its package would extend federal unemployment insurance benefits but trim the weekly assistance from $600 to $200. In September, states would be expected to distribute benefits equal to 70 percent of a laid-off worker’s pre-COVID-19 wages. The GOP also would make another round of the CARES Act’s $1200 economic impact payments, extend the Paycheck Protection Program with another $100 billion, and exempt firms from legal liability if workers or customers contract COVID-19. It includes no new funding for state and local governments but would give them more flexibility in how they use remaining CARES Act funds. Schools would get $105 billion but only if they reopen to in-person classes. The proposal also includes 100 percent deductibility of business meals.
What happens next? It is unclear if the leadership bills could even pass the GOP-controlled Senate. And it now has to be compromised with a $3 trillion House bill. The GOP leadership and the White continue to say the plan could be broken up into separate pieces. House Speaker Nancy Pelosi has rejected that idea.
Most economists support more federal assistance. PBS reports that most economists favor continued extra aid for unemployed Americans, more funding for state and local governments and more grants for struggling small companies. But, the open-ended nature of government aid is cause for concern, too. Said Case Western Reserve University economist Scott Shane, “Are we going to do this twice more every six months going forward? You can’t just borrow forever.”
Biden plan targets profitable, low-tax companies. The Wall Street Journal explains (paywall) the presumptive Democratic presidential nominee’s corporate tax reform plans. Biden would raise corporate tax rates and levy a 15 percent minimum tax on profits reported to investors. The plan would curb the use of available tax breaks and generate $166 billion over a ten years, according to TPC estimates.
The EU backs away from digital taxes. US threats of retaliatory tariffs seem to have had an impact. France plans to delay its 3 percent digital tax until December. Digital taxes in Spain, Italy, the United Kingdom, Austria, and the Czech Republic likely won’t take effect before 2021 either. The Organization for Economic Cooperation and Development is slow-walking its plans for a global digital tax and global corporate tax rate. Said OECD director of tax policy Pascal Saint-Amans, “The Europeans were keen on taxing American digital companies, but not that keen in seeing their companies taxed elsewhere.” Moreover, “Europeans underestimate how bipartisan the U.S. position is.” he said.
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