Home WebMail Friday, November 1, 2024, 07:32 AM | Calgary | -4.0°C | Regions Advertise Login | Our platform is in maintenance mode. Some URLs may not be available. |
Posted: 2020-03-31T18:48:02Z | Updated: 2020-03-31T18:48:02Z

Senate Majority Leader Mitch McConnells first draft of a coronavirus relief bill included cash payments to most Americans except for those who earned no money at all.

The proposal set up the payments as advance tax rebates, and tax benefits typically exclude people with no incomes.

Then something unusual happened: Democrats complained about the income requirement no surprise but so did Republicans, arguing the poorest deserve coronavirus rebates too.

Just because theyre on the lower end of the income scale doesnt mean they dont have some basic expenses, said Sen. Mike Rounds (R-S.D.), for example.

And so the final bill had no income requirement. The legislation, signed into law less than a week ago, will allow just about every adult in the U.S. earning less than $75,000 (and every married couple earning less than $150,000) to be eligible for the full $1,200. People whove filed their taxes for 2018 or 2019 and set up direct deposit with the IRS should receive rebates in their bank accounts in the coming weeks. The rebates are worth $1,200 per adult and $500 per child.

The coronavirus recovery rebates may be the first tax-based social policy that will throw cash directly to the very poorest Americans with no condition other than having to file a tax return.

Its a quite significant development, said Bob Greenstein, president of the Center on Budget and Policy Priorities, a liberal D.C. think tank. He noted that the last time Congress sent everybody a stimulus check, in 2008, it excluded people with no or very low earnings.

Another reason its significant is that Republicans, not just Democrats, pushed to include the poorest, and that there are hints theyre more willing to do so generally. Sen. Mitt Romney (R-Utah) co-sponsored a bill in December with Sen. Michael Bennet (D-Colo.) that would change the Child Tax Credit to deliver cash to people with no incomes.

Looking at these two developments together gives me some hope that maybe were at the beginning of a policy cycle where there could be a breakthrough, Greenstein said in an interview.

Tax benefits are a big part of the federal safety net. The Child Tax Credit and the Earned Income Tax Credit are two of the federal governments most important social programs, doling out thousands of dollars each to millions of households every year during tax filing season. Most other federal programs provide in-kind benefits for food, housing or health care, while the tax credits deliver actual cash.

But the benefits only go to households that are already making money. Democrats (and Greenstein himself) have defended earnings requirements as good politics, because Republicans would say people dont deserve the money and erode public support for the policy.

Matt Bruenig, founder of the Peoples Policy Project, an unabashedly left-wing think tank, has argued for years that the earnings requirements, which gradually phase in benefits as incomes rise, callously deny cash to people most in need.

Theres been a sea change and everyones seeing the phase-in with fresh eyes, Bruenig said. Here youve got a new program being proposed, with the same structure [as existing programs], and people see it and theyre like, Oh, my God, its just not right.

In recent years Democrats have increasingly pushed to eliminate earnings requirements for tax credits, including in bills that would set up advance monthly payments, essentially transforming the tax credits into universal child benefit programs (which are standard in other advanced countries). Party leaders have not yet embraced the idea, but the coronavirus pandemic could bring it more attention.

Rep. Rashida Tlaib (D-Mich.), for example, proposed giving everyone $2,000 on prepaid debit cards, then $1,000 per month until a year after the public health emergency subsides. Recurring payments had been a Democratic priority the party was unable to achieve in the bill that passed last week.

Tlaibs debit card idea highlights a problem with the tax rebates: Everybody beneath the income limits is eligible, but only if they file a tax return, which not everyone is required to do. Some 15 million households did not file a return in 2019, according to the Urban-Brookings Tax Policy Center . (Its possible to file online for free .)

HuffPost readers: Are you filing a tax return so you can receive the recovery rebate? Tell us about it email arthur@huffpost.com . Please include your phone number if youre willing to be interviewed.

House Speaker Nancy Pelosi (D-Calif.) has said more payments to individuals will be a priority for Democrats if Congress takes up another bill to respond to the pandemic fallout, and several Democrats whove pushed for big increases to existing tax credits echoed the sentiment.

If we pass additional measures to respond to an ongoing economic downturn, Congress has an opportunity to expand the Earned Income Tax Credit and the Child Tax Credit to help working families get further ahead, Sen. Sherrod Brown (D-Ohio) said in a statement to HuffPost. Brown has been a leading sponsor of bills to make tax credits more generous and also to set up advance monthly payments.

The cash payments provision that passed last week was just one part of a broader bill that included higher unemployment benefits plus money for businesses, state governments and hospitals. It was the third piece of legislation Congress has passed in response to the outbreak, which has stalled the economy and killed more than 3,000 Americans.

Rep. Rosa DeLauro (D-Conn.), another advocate of more generous tax credits, said the next emergency package should make the Child Tax Credit fully refundable. Currently, the Child Tax Credit reduces someones tax bill by $2,000 per child, but only the first $1,400 is refundable. If the full amount were refundable then people with no tax liability would be able to receive $2,000 per child as cash. Among the various proposals to expand tax credits, making the child tax credit refundable probably has the most support.

As the United States faces a public health pandemic and an economic downturn, our federal response must be focused on helping those in need, DeLauro said, adding that the Child Tax Credit amount should increase by $1,000.

Your Support Has Never Been More Critical

Other news outlets have retreated behind paywalls. At HuffPost, we believe journalism should be free for everyone.

Would you help us provide essential information to our readers during this critical time? We can't do it without you.

You've supported HuffPost before, and we'll be honest we could use your help again . We view our mission to provide free, fair news as critically important in this crucial moment, and we can't do it without you.

Whether you give once or many more times, we appreciate your contribution to keeping our journalism free for all.

You've supported HuffPost before, and we'll be honest we could use your help again . We view our mission to provide free, fair news as critically important in this crucial moment, and we can't do it without you.

Whether you give just one more time or sign up again to contribute regularly, we appreciate you playing a part in keeping our journalism free for all.

Support HuffPost

Both the House and Senate adjourned after passing the Coronavirus Aid, Relief and Economic Security Act last week. Its not clear how soon another piece of legislation could come together.

McConnell said Tuesday he wouldnt let Democrats use the crisis to achieve unrelated policy items they wouldnt otherwise be able to pass.


A HuffPost Guide To Coronavirus