COVID-19 job losses continue to grow. Another 3.3 million Americans lost jobs last week, bringing the total to 33 million over 7 weeks. This level of unemployment claims implies an April jobless rate of 16 percent, according to The Wall Street Journal (paywall). That would be the highest unemployment rate since the Great Depression.
Relief bill 4.0. Much talk. No plan—yet. House Democrats continue to build their latest stimulus bill, though it looks like they won’t have a plan to unveil until next week. House Speaker Nancy Pelosi continues to sift through multiple ideas that she’d add to the one certainty—more money for state and local governments.
The President’s Budget and the COVID-19 pandemic. TPC’s Erald Kolasi and Gene Steuerle report that the President’s budget retains a focus on increasing spending for Social Security and health care and little else, other than interest on the debt. The current pandemic and recession highlight that the budget must focus on other needs as well, particularly support for working families and workers who have lost jobs.
A fully deductible three-martini lunch won’t feed the COVID-19 economy. TPC’s Howard Gleckman considers one of President Trump’s demands for the next pandemic relief bill. The long-time hotel and resort owner wants Congress to restore the ability of businesses to fully deduct business meals and entertainment expenses. But Howard argues that “as a tool to stimulate the current troubled economy, this tax break is, as the president himself might say, a total loser.”
Maryland Governor Larry Hogan vetoes new taxes for schools. Citing the state’s economic distress resulting from the COVID-19 pandemic, Hogan vetoed taxes on digital advertising, digital downloads, and vaping, as well as an increase to the state’s tobacco tax. The taxes would raise more than $400 million a year and offset the cost of five years of school improvements. Hogan opposed the plan long before the pandemic.
Georgia tax revenues took a brutal hit from the pandemic in April. The state’s tax collections were off by $1 billion in the month of April—a 35.9 percent drop from what had been projected. The state’s budget director directed state agencies to plan for 14 percent budget cuts. The state’s $27.5 billion budget may have continued revenue shortfalls throughout the year.
Same goes for Wisconsin, though so far the hit is not as hard. Wisconsin’s tax collections were off by $870 million in April, totaling only $1.1 billion. The state’s Legislative Fiscal Bureau reports a $313 million decrease in tax collections for the first ten months of this fiscal year, compared with the same period last year.
Save May 21 for a webinar, “Responding to Income Shifting by Multinational Corporations.” TPC and the University of North Carolina Tax Center will host a live webinar featuring accounting, law, and economics experts. They’ll talk about how profit shifting lowers US taxes paid by multinational companies, the effectiveness of efforts to reduce base erosion, how best to assign profits, how the Organization for Economic and Cooperative Development might proceed on these issues, and how COVID-19 might affect multinationals’ activities. Register for the Zoom webinar here.
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