Congress still stalemated over pandemic relief. Aides to Senate Majority Leader Mitch McConnell spread the word yesterday that a majority of Republicans would not go along with a bipartisan $908 billion relief plan. Their problems: They won’t support a compromise liability shield for businesses sued by workers or customers who contract COVID-19 or $160 billion in state and local government relief. Absent federal aid, state legislatures will need to consider spending cuts and tax increases to balance their budgets. TPC’s Tracy Gordon told The Hill, “The most effective form of relief and stimulus for the overall economy is flexible money that states can use depending on need.”
About a second stimulus payment. Sen. Josh Hawley introduced a bill yesterday to provide a second round of economic impact payments of $1,200 to individuals earning $75,000 or less. Treasury Secretary Steven Mnuchin is promoting a $600 payment that would replace expanded unemployment benefits. Democrats say that is a non-starter.
When drafting COVID-19 legislation, Congress should focus on state tax revenue declines. TPC’s Lucy Dadayan and Kim Rueben write that while some argue that states do not need federal assistance because of better than expected tax collections, State and Local Finance Initiative data show the “actual revenue declines are deep and widespread." These losses paint a clear picture of how Congress can best target federal dollars where they are needed most.
Is a clawback a payback? Treasury Secretary Steven Mnuchin told the Congressional Oversight Commission that he followed the intent of the law on November 19 when he announced Treasury would end CARES Act lending programs on December 31 and take back billions of unused dollars from the Fed. House Democrats questioned whether Mnuchin would have interpreted the law the same way if President Trump was re-elected.
In Illinois: Cook County treasurer questions auction program for tax-delinquent properties. For 81 years, the county has auctioned off abandoned or vacant properties with unpaid back taxes to get them into productive use and back on the tax rolls. But a new report concludes that few are bidding on the properties, leaving thousands sitting empty. County Treasurer Maria Pappas wants the Illinois General Assembly to find a better solution.
And in New Jersey: Tax credits for developers of affordable housing. State housing officials will award $27 million in federal tax credits to developers who build apartments in suburbs that might otherwise be unaffordable for childcare workers or others earning low or moderate incomes. New Jersey will give the credits to commercial and nonprofit developers of 21 projects across the state.
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].