Almost half of Americans say they or somebody in their household lost income since March. New figures from the Census Bureau show that 119 million Americans reported a loss of income since March 13, the first day of the national coronavirus emergency. The loss disproportionately hits lower-income households. Over 50 percent of Americans living in households that make less than $100,000 a year reported such a loss, and 57 percent of Americans who earn less than $35,000 a year have lost income.
Good news? The Labor Secretary says unemployment could fall by year’s end. Labor Secretary Eugene Scalia told Fox Business “I think that we can get under 10 percent by the end of the year.” He also said the Administration may support a $450 per week bonus for people who return to work—a plan under consideration by GOP lawmakers. The payment would replace an expiring federal unemployment supplement.
But CBO thinks extending unemployment benefits would boost the economy—in the short run. The Congressional Budget Office projects that extending the $600-a-week benefit would boost economic output for the remainder of this year but lower it next year. Employment would be lower this year and in 2021. About 80 percent of workers would make more with the extra benefits that they’d make working. In a TPC interview yesterday, former Obama economic advisor Jason Furman backed extending federal unemployment benefits, though at a lower level than the current $600.
Next week on the Hill. The Senate Finance Committee will hold a virtual hearing on the role of unemployment insurance in the Coronavirus Aid, Relief, and Economic Security (CARES) Act on June 9, at 2:30 pm.
Extending the PPP. Late Wednesday night, the Senate approved a House bill to liberalize the CARES Act’s Paycheck Protection Program. Firms would have 24 weeks instead of 8 weeks to spend the federal money, and more funds could be used for non-payroll purposes. PPP loan recipients also could defer payroll taxes through 2020.
Georgia Governor Brian Kemp says state tax collections will decline less than projected in the coming fiscal year. He told state agencies to expect an 11 percent drop in tax revenues because of the coronavirus recession, better than the previous estimate of 14 percent. Lawmakers, who return to session June 15, will have $2.6 billion less to spend in fiscal 2021, which starts July 1.
Will Colorado repeal its property-tax limiting Gallagher Amendment? A bipartisan group of state lawmakers is working to put the issue to voters. Since 1983, the limitation has provided about $35 billion in tax relief to state homeowners. But due to falling revenues, Colorado’s budget writers proposed a spending cut of $3 billion this year and next, and the Gallagher Amendment could trigger an 18 percent property tax cut. That would require an additional $491 million in cuts to schools and $204 million in cuts to county governments in 2021 in the midst of the pandemic.
IRS Office of Chief Counsel to Extend Virtual Settlement Days. Settlement Days are coordinated efforts to resolve cases in the US Tax Court by providing taxpayers not represented by counsel the opportunity to receive free tax advice and resolve disputes amicably. The Office of Chief Counsel first announced its shift to Virtual Settlement Days on May 5. ”The response to these programs has been overwhelming, and it encouraged us to expand this initiative to help more people," said IRS Chief Counsel Mike Desmond.
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