As negotiations continue in Washington DC over the next coronavirus relief package, Republicans and Democrats have shifted their focus to the next round of direct stimulus payments.
While Democrats are looking to maintain the same income limits required to receive aid, Republicans are arguing for lower limits.
In March, the CARES Act established that individuals with incomes of up to $75,000 and married couples making up to $150,000 would qualify for the full amount of $1,200 or $2,400 respectively. Individuals making over $99,000 and couples with no children who make over $198,000 annually are excluded from receiving payments.
GOP Senate Majority Leader Mitch McConnell of Kentucky wants that lowered, saying in a statement earlier this week "I think the people that have been hit the hardest are people who make about $40,000 or less."
House Speaker Nancy Pelosi (D-CA) slammed McConnell's suggestion, saying "I think families making over $40,000 probably need assistance … depending on their family situation."
It’s unclear how committed Republicans are to lowering the income limits, and what exactly a lower ceiling would look like. But GOP lawmakers and the White House have indicated that they want to focus coronavirus relief efforts on those who have been most affected by the pandemic and that they want to limit the total price tag of the next coronavirus bill.
Treasury Secretary Steven Mnuchin said Monday that Republicans are using a $1 trillion price tag for the overall package as their starting point. The Joint Committee on Taxation estimated that the first round of payments would lower federal revenue by nearly $300 billion, so a second round of payments that is identical in scope to the first would account for a significant percentage of Republicans’ desired total cost. -The Hill
Conservative and Democratic experts are similarly divided on direct payments.
According to The Hill, the right-leaning National Taxpayers Union EVP Brandon Arnold arguest that "it’s definitely a step in the right direction to lower the income threshold," as it makes no sense to give money to people who don't need it.
Former Obama Treasury Department economist and current Eercore ISI employee Ernie Tedeschi disagrees, saying that he doesn't see a good economic reason to curtail the income limits.
He said that the first round of payments “was already well-targeted at lower- and middle-income families” and that these families are likely to quickly spend the money.
Tedeschi analyzed a scenario in which individuals making up to $40,000 and married couples making up to $80,000 were eligible for the full payment amounts, and the phase-out rate was the same as with the first round of payments. He estimated that in this situation, 20 million fewer families would get payments than did under the first round, and many families who still did receive payments would get smaller ones. He also said that payments with these income limits would cost about $60 billion less than payments with the same limits as the first round, and argued that that amount of savings is insignificant in the context of a big stimulus bill. -The Hill
Meanwhile, while 'economists and tax professionals across the ideological spectrum' may have praised the IRS for issuing the vast majority of checks from the March stimulus, some people are still waiting on their money - including many low-income taxpayers who aren't required to file tax returns, and don't receive various Social Security, Supplemental Security Income, veterans benefits, or Railroad Retirement benefits.
On Tuesday, IRS Commissioner Charles Rettig asked tax professionals to help the agency deliver payments to people for whom it has no information.
"The underserved communities here need help," he said.
By Zerohedge.com
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