The 117th Congress is in session. The House elected Nancy Pelosi once again to serve as Speaker of the Democratic-led chamber. Control of the Senate remains unknown until the runoff elections in Georgia tomorrow. Some Republicans in the House and Senate will try to overturn the results of the presidential election on Wednesday, when the chambers meet for a joint session to formally count the votes of the Electoral College. The week will be… unusual.
Economic Impact Payments, Round Two. TPC’s Janet Holtzblatt outlines how much households have begun to receive since President Trump signed the COVID-related Tax Relief Act of 2020 last week. TPC estimates show that this round of economic impact payments, plus those provided in the CARES Act, will increase after-tax income, on average, by $2,610. Overall, after-tax household income will rise, on average, by 3 percent. Households in the bottom quintile of the income distribution will receive a 17-percent average boost in their after-tax income.
A new look at racial wealth inequalities before the pandemic. TPC’s Aravind Boddupalli reviews the latest data from the Federal Reserve Board’s 2019 Survey of Consumer Finances: (1) The average net worth of White households is six to seven times higher than that of Black and Hispanic or Latino households; (2) more White households own tax-preferred assets than Black and Hispanic or Latino households; and (3) White households are more likely than Black and Hispanic or Latino households to have the resources to pay down their debt. Aravind concludes that without active steps to reduce these inequities, post-pandemic data releases will show worsening racial wealth gaps.
On Thursday: Tune in to The Prescription. TPC’s Howard Gleckman will talk with guest Jed Kolko, chief economist for the job site indeed.com. They’ll discuss how the pandemic is reshaping where and how we work and what data from Indeed and other sources can tell us about the state of the economy and possible trends in public health. Register here for the January 7 online event at noon.
How can the CDCTC better subsidize home-based child care? TPC’s Elaine Maag and Nikhita Airi write that while some families can use the child and dependent care tax credit (CDCTC) to help subsidize home-based care, the credit’s benefits are ill-timed and not available to the lowest-income households. President-elect Biden has proposed a fully refundable, larger credit with expanded eligibility. This is an improvement, but “cash-strapped parents generally must pay for child care as it is delivered. They can’t wait for a tax refund to offset part of the cost. Ideally, families could receive the credit throughout the year as child-care expenses were incurred.”
Some tariff news. Tariff exclusions on certain Chinese imports expired last Thursday, December 31. The exclusions shielded certain companies from paying taxes that range from 7.5 percent to 25 percent on certain products imported from China. That means Americans will have to pay a bit more for products like electric motors, microscopes, salad spinners, thermostats, breast pumps, ball bearings, and fork lifts. And escalating a fight between the US and the European Union over government subsidies to airplane manufacturers Airbus and Boeing, the Trump Administration will impose new 25-percent tariffs on European goods, including airline parts, cognac, and wine from France and Germany. Those taxes take effect January 12.
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].
