Eight key provisions to expect in the next coronavirus relief package. House Democrats are aiming to release their next coronavirus relief bill this week, perhaps today. A vote won’t occur before Friday. It may include state and local aid; rent and mortgage assistance; cash payments of perhaps $2,000 monthly during the pandemic; additional help for workers and businesses; expansion of broadband service to underserved areas; funding for COVID-19 testing, tracing, and treatment; support for the postal service; and nutrition programs.
Treasury Secretary Steven Mnuchin: States should borrow to cover pandemic costs. Mnuchin told CNBC that the Trump Administration and Republicans are not willing to help states with longstanding financial issues. He suggests that governors of cash-strapped states turn to the Federal Reserve instead, and take advantage of low interest rates. Borrowing to cover operating expenses is generally not considered good practice.
PPP Loans from the SBA: Mnuchin now willing to consider easing their terms. Amid growing concerns from lawmakers and business advocates, the Treasury Secretary says he might agree to reworking Paycheck Protection Program loans. “The way Congress designed this was eight weeks of payroll and 25 percent of overhead. If Congress wants to change that rule, I'm happy to work with Congress if there's bipartisan support to do that.” Mnuchin also is amenable to a “technical fix” to aid businesses that are unable to open despite loosening social distancing rules in some places.
Will cutting capital gains taxes fix the COVID-19 economy? TPC’s Len Burman says no. It would be poorly targeted, since it disproportionately helps the wealthy who spend less of their tax cuts than others. It wouldn’t lower the price of investment much since it would benefit holders of just one-third of corporate stock. The rest is held by non-taxpaying investors, such as pensions and foreigners.
Is the White House aiming to renew its trade war with China? White House trade adviser Peter Navarro suggests that a “bill has to come due” for the Chinese government’s role in the COVID-19 pandemic. President Trump remains “torn” about whether to pull back from the current trade deal with China and reimpose new tariffs on Chinese imports. Trump also is mulling pulling federal employee retirement funds from Chinese investments.
Saudi Arabia to triple its value-added tax rate to raise $27 billion. The kingdom’s two-year-old value-added tax will climb from 5 percent to 15 percent in July. The Saudi government is trying to raise $27 billion amid crashing oil prices, a stagnating domestic economy, and healthcare expenses stemming from the coronavirus pandemic.
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 protected].
