McConnell’s “skinny” $500 billion coronavirus relief bill died in the Senate. In the least surprising event of the week, the plan got just 52 votes, well short of the 60 it needed to advance. It included $300 per week in federal unemployment benefits through Dec. 27, another round of Paycheck Protection Program (PPP) funding, more money for testing and schools, and liability protections from coronavirus-related lawsuits. But it excluded assistance for state and local governments and a second round of direct economic relief payments to individuals. Both are in a $3 trillion bill passed by the House in May. Will the bill’s failure, a slowing recovery, pressure from moderate Democrats on House Speaker Nancy Pelosi, and President Trump’s political problems bring the parties to the table?
For those in need, a new round of cash stimulus payments could help the most. TPC’s Elaine Maag describes an Urban Institute analysis that finds an additional $1,200 payment per person (up to $6,000 per household) would lift 8.3 million people out of poverty through the end of the year. If Congress approves a new round of COVID-19 relief, Elaine concludes that cash payments would be an effective, equitable method to reduce poverty, particularly among Black and Hispanic households.
How about more opportunity zones? President Trump is fine tuning his pitch to Black voters, His main promise: An expansion of opportunity zones that were included in the Tax Cuts and Jobs Act (TCJA). The White House says the program will reduce poverty and has resulted in $75 billion in private investment to distressed communities. The Urban Institute’s Brett Theodos says developers and investors are the real beneficiaries: “The program… is set up really… for billionaires, or at least multimillionaires.” He warned that creating additional zones could redirect investment from the neediest neighborhoods to less risky areas for development.
How did corporations respond to the TCJA’s tax cuts? As widely expected, they accelerated deductions into 2017 (when tax rates were higher) and delayed income into 2018 (when rates were lower), thereby minimizing their taxes. Those are the findings of a study by Tim Dowd and Christopher Giosa of the Joint Committee on Taxation and co-author Thomas Willingham. They analyzed a sample of US corporate tax returns from 2017 and 2018 to see how firms responded to corporate tax changes in the 2017 TCJA.
Georgia’s tax collections in August are up compared to last year. Governor Brian Kemp announced that the state’s net tax collections in August increased $134.5 million from a year ago, to nearly $1.89 billion. Some state budget-writers remain cautious, however, noting that such summer gains could be temporary.
But in Hawaii… State tax collections have suffered in the wake of the pandemic. Hawaii, highly sensitive to the collapse in tourism, faces a $2.3 billion shortfall for its two-year budget. Tax collections for fiscal year 2022 are expected to total about $6.4 billion, or nearly $200 million less than projected in May. At the end of June 2019, the state had collected $7.1 billion in taxes. Analysts predict annual tax collections may not reach $7 billion again until fiscal year 2024.
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