Institute on Taxation and Economic Policy

COVID-19 Tax Policy Resources

Lawmakers continue to examine how to respond to the continually evolving economic crisis, precipitated by COVID-19. ITEP’s unique contribution to the policy debate is its rapid analyses of economic stimulus and relief plans. Decisions made now will have short- and long-term implications for families, communities and state and local governments. We are committed to providing distributional analyses of how all proposals affect people across the income spectrum. When possible, we also will provide analyses for all 50 states.

You can find all ITEP’s COVID-19-related work on this page.

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Federal Stimulus Packages & Proposals

Estimates of Cash Payment and Tax Credit Provisions in American Rescue Plan

New Estimates on Senate’s Slightly Revised Cash Payment

March 3, 2021

As the Senate takes up the COVID relief bill passed by the House last week, Senate Democrats have proposed to lower the income level at which the $1,400 cash payments would be phased out. New estimates from ITEP demonstrate that, for most people, the change would make no difference.

Details of House Democrats’ Cash Payments and Tax Credit Expansions

ANALYSIS: Cash and Tax Provisions in Biden’s Economic Recovery Plan

National and State-by-State Estimates of Proposed $2,000 Cash Payments

National and State-by-State Estimates of New $600 Cash Payments

President Biden’s Child Tax Credit Proposal Could Right a Historical Wrong

February 2, 2021 | JENICE ROBINSON and MEG WIEHE

Originally targeted toward middle- and upper-income families, years of incremental improvements to the Child Tax Credit (CTC) have still failed to reach the lowest-income households and one-third of all children, including nearly half of Black and Hispanic children. Biden’s American Rescue Plan includes an overdue expansion of the CTC that would reach those children disproportionately left behind, demonstrating how policy can both remedy historical injustices and set our nation on a more equitable and anti-racist path going forward.

A Second Round of Direct Cash Payments Could Provide an Average $1,550 to the Poorest Families

December 9, 2020 | JENICE ROBINSON

Policymakers must act. People are struggling because they are either out of work, involuntarily working part-time, trying to financially catch up after being out of work for a spell, or squeaking by because we live in a wealthy democracy that fails to guarantee basics such as access to affordable housing, health care, food, and jobs that pay living wages.

SALT Cap Repeal Has No Place in COVID-19 Legislation: National and State-by-State Data

July 17, 2020 | STEVE WAMHOFF

Democratic leaders have put forth imaginative proposals to address this crisis and help those who need it most. Repealing the cap on SALT deductions isn’t one of them. More than 62 percent of benefits from repeal would flow to the top 1 percent.

The HEROES Act Would Correct CARES Act Business Tax Mistakes

May 20, 2020 | STEVE WAMHOFF

The HEROES Act includes important changes to business tax provisions in the CARES Act, which put an expiration date on individual relief but allows corporations to manipulate profits to dodge billions in taxes both retroactively and in future years. Millionaires who own pass-through businesses receive an average benefit of $1.6 million in 2020 alone. The House-passed HEROES Act would correct these mistakes and redirect resources to where they are needed.

Major Cash Payment and Tax Provisions in the HEROES Act

May 15, 2020 | STEVE WAMHOFF and MEG WIEHE

National data for major provisions and state-by-state data for tax rebates

The major provisions for cash payments and tax changes in the House Democrats’ Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act would provide nearly $600 billion to individuals and households and average benefits of more than $3,000 to families in all but the highest income levels.

Analysis: How the HEROES Act Would Reach ITIN Filers

May 14, 2020 | MEG WIEHE and LISA CHRISTENSEN GEE

The HEROES Act, filed by the House Democrats this week, includes a new one-time payment of $1,200 per adult and child and extends the payment to ITIN filers and their families. The bill also includes a retroactive change to the CARES Act ensuring ITIN filers will also receive the initial payment under the CARES Act. ITEP estimates more than 4.3 million adults and 3.5 million children would benefit from this change.

The CARES Act Provision for High-Income Business Owners Looks Worse and Worse

April 24, 2020 | STEVE WAMHOFF

A select group of millionaires will receive an average tax break of $1.6 million thanks to a CARES Act provision that is receiving delayed but well-deserved scrutiny.

Partying Like It’s 2017: How Congress Went Overboard on Helping Businesses with Losses

UPDATED April 24, 2020 | STEVE WAMHOFF

The Trump-GOP tax law enacted at the end of 2017 contained a few provisions that raised revenue to offset a fraction of its tax cuts. Two of those provisions in the 2017 law restricted the use of business losses—and the CARES Act suspends those restrictions in ways that are likely to further enrich the wealthy rather than boost our economy more broadly.

Additional Resources

 

See also: Payroll Tax Cut Elimination

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State Policy

EITC Enhancements for States to Consider in 2021

February 16, 2021 | AIDAN DAVIS

In total, the EITC components of the American Rescue Plan would provide around $13 billion in additional EITC benefits to childless workers. Innovative approaches at the state-level continue to make headlines, while lawmakers and advocates seek ways to improve economic security for their lowest-income residents.

Immediate Action State Lawmakers Can Take to Support Families and Children

February 2, 2021 | AIDAN DAVIS

Biden’s COVID-relief proposal includes significant, temporary expansion of the Child Tax Credit (CTC). Should the American Rescue Plan become law, states could couple to the federal changes. But there’s no need to wait. State lawmakers can enact and enhance state-level CTCs to remedy flaws in the federal law and reduce the number of children in poverty and deep poverty.

New Analysis Compares HEROES Act and HEALS Act, Disaggregates Data by Race and Income

National and state-by-state data

Tax Rebate Proposal in the CARES Act

National and state-by-state data

State Tax Policy: Innovations to Embrace, Schemes to Avoid

November 20, 2020 | AMY HANAUER

Voters stood up for better state and local taxes to help communities emerge from the current staggering fiscal crisis with tax structures that reduce inequality at a time when rich people are thriving and public services are under siege. Preserving public spending will boost the economy and improve lives–and cutting these essentials will not only hurt people but also deepen the downturn, a lesson we learned in the Great Recession’s slow recovery.

Another Reason to Tax the Rich? States with High Top Tax Rates Doing as Well, if Not Better, than States Without Income Taxes

September 23, 2020 | CARL DAVIS

ITEP updated a 2017 study that examined the economic performance of the nine states with the highest top marginal tax rates compared to the nine states with no state income tax. Economies in states with the highest top marginal rates grew faster. States facing budget shortfalls should first look at raising taxes on those most able to pay (incomes at the top have grown during this economic crisis) before considering harmful budget cuts.

State Options to Shore up Revenues and Improve Tax Codes amid Pandemic

April 15, 2020 | DYLAN GRUNDMAN O’NEILL and MEG WIEHE

The COVID-19 pandemic is an extraordinarily challenging time, as we see harm and struggle affecting the vast majority of our families, businesses, public services, and economic sectors. In the world of state fiscal policy, where revenue shortfalls are likely to be far bigger than can be filled by the initial $150 billion in federal aid or absorbed through funding cuts without causing major harm, state policy decisions must include tax increases.

Sales Taxes and Social Distancing: State and Local Governments May Face Their Steepest Sales Tax Decline Ever

April 2, 2020 | MEG WIEHE and CARL DAVIS

One pressing question is what will an economic downturn in which consumers are anxious, facing job loss, or simply spending their time sheltering in place and not spending money in typical ways, mean for states’ ability to raise revenue?

Adding Flexibility to Make the EITC Work During the Pandemic

April 1, 2020 | AIDAN DAVIS

The Earned Income Tax Credit (EITC) is a vital source of income for low-wage workers. But with three in four Americans now under orders to stay home to slow the spread of COVID-19, earning an income is now impossible for millions of Americans. Temporarily modifying the structure of the EITC to reflect the realities of our current economy could provide a vital lifeline to low-income workers who have seen their incomes disappear during this crisis.

It’s Time for Some State Fiscal Policy Triage

March 18, 2020 | ITEP STAFF

The COVID-19 novel coronavirus’s effects on public health and economies at all scales are creating a daunting situation for state budgets as well. Lawmakers can choose and prioritize their responses through a straightforward approach similar to that taken by health professionals: marshal and reinforce available resources, triage response options to prioritize the most vital services and most vulnerable people, and enact or strengthen the policies that will help address longer-term issues as well as immediate emergencies.

Additional Resources

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Corporate Tax Cuts

CARES Act Helps Create $4.6 Billion Tax Cut for Health Care Companies Paying Opioid Settlements

February 12, 2021 | MATTHEW GARDNER

Talk about a one-two punch. A new report from the Washington Post reveals that the U.S. public is set to pay for the opioid crisis again. Already, communities across the country have paid a heavy price via the devastating public health toll. Now, it appears taxpayers will be on the hook for billions in corporate tax breaks as four pharmaceutical companies exploit a loophole in the Trump-GOP tax law and a CARES Act tax provision meant for companies facing pandemic-related profit losses.

Amazon Has Record-Breaking Profits in 2020, Avoids $2.3 Billion in Federal Income Taxes

February 3, 2021 | MATTHEW GARDNER

Amazon’s winning streak in its battle against the U.S. tax system remains intact. This week the retail giant announced record-breaking sales and income for 2020, and an effective federal income tax rate of just 9.4 percent, less than half the statutory corporate tax of 21 percent. If Amazon had paid 21 percent of its profits in federal income tax, that would have come to $4.1 billion. The company’s reported current tax of $1.8 billion was less than half that, meaning last year Amazon avoided $2.3 billion in taxes.

Pandemic Profits: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less than 1 Percent

February 1, 2021 | MATTHEW GARDNER

In the early days of the COVID-19 health and economic crisis, it quickly became clear that consumers would drastically shift how they buy goods and services and that certain companies—chief tax avoiders among them—would profit immensely. Netflix’s “current” federal income tax for 2020 was $24 million, which equals just 0.9 percent of the company’s pretax income for the year. This is another way of saying Netflix paid an effective federal income tax rate of just 0.9 percent in 2020. If the company paid the 21 percent statutory rate, its tax bill would be $572 million.

A Tax Loophole You Could Drive a Food Truck Through: Senate GOP Proposes Full Deductibility of Business Meals

July 28, 2020 | MATTHEW GARDNER

After weeks of being in no particular hurry to assemble a new COVID-19 economic relief package, the Senate GOP has released its plan. It includes the “Supporting America’s Restaurant Workers Act,” which would allow business owners to write off 100 percent of the cost of their restaurant meals through the end of 2020. The two most obvious questions to ask about such a plan are “why” and “why now?” Republican lawmakers have not offered sensible responses to either because they have none.

Pandemic Profits: Netflix’s Record Profit Haul, Past Tax Avoidance Raise Questions about Tax Law’s Weaknesses

April 29, 2020 | MATTHEW GARDNER

At a time when many companies are facing existential threats due to the COVID-19 pandemic and associated economic shutdown, it is vital to ensure that our corporate tax laws apply fairly to companies that are still turning a profit in these turbulent times.

Trump to Restaurant Owners: “Let Them Eat Skyboxes”

April 6, 2020 | MATTHEW GARDNER

President Trump destroyed everyone’s coronavirus press conference bingo card by announcing that a conversation he had with celebrity chef Wolfgang Puck inspired him to propose restoring a corporate tax deduction for business entertainment expenses. Trump’s own signature tax plan repealed this break two years ago.

Boeing “CARES” A Lot About its Shareholders—But What about the Rest of Us?

April 1, 2020 | MATTHEW GARDNER

The gigantic Coronavirus-related tax and spending bill enacted last week, the so-called “CARES Act,” sets aside $17 billion in loans for “businesses critical to maintaining national security.” It’s generally understood that the bill’s authors want much, if not all, of this $17 billion to go to a single company: Boeing. So it behooves us to ask whether Boeing benefits America and its economy in ways that merit this largesse.

Congress “CARES” for Wealthy with COVID-19 Tax Policy Provisions

March 31, 2020 | MATTHEW GARDNER

At a time when record numbers of Americans are facing unemployment, state and local governments are facing a perfect storm of growing public investment needs and vanishing tax revenues, and small business owners are struggling to avoid even more layoffs, lavishing tax breaks on the top 1 percent shouldn’t be in anyone’s top 20 list of needed tax changes.

COVID-19 Is No Excuse for Airline Industry or Any Other Corporate Tax Cut

March 10, 2020 | MATTHEW GARDNER

Trump administration officials have reportedly floated the idea of including tax breaks for the airline industry in its package of COVID-19-related stimulus proposals, which would allow airline companies to defer income taxes into the future. This is an odd policy choice since most of the biggest airlines are already using deferral to zero out most or all of their federal income taxes on billions of dollars in profits.

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Blogs

Targeted Relief and the American Rescue Plan in Five Charts

March 11, 2021 | STEPHANIE CLEGG

The American Rescue Plan Act is unique in that it employs the tax code to deliver relief to those struggling most. These five charts provide a glimpse of how the plan helps families across the income spectrum and also targets economic relief to low- and moderate-income families in the form of cash payments and expansions to the Child Tax Credit and Earned Income Tax Credit.

An Unequal Recession Will Breed Unequal Recovery Without Bold Investments

February 26, 2021 | STEPHANIE CLEGG

Without bold investments now, experts predict a longer, more unequal recovery. President Biden’s American Rescue Plan, the framework for legislation expected to pass this week in the House, would boost economic well-being for those whose livelihoods were most affected by the pandemic-induced economic crisis.

New Leadership Should Seize Tax Justice Mandate; Cash Payments Offer On-ramp

January 8, 2021 | AMY HANAUER

With the victory of Senators-elect Raphael Warnock and Jon Ossoff in Georgia, Democrats now control all three branches of government. New leaders should seize this moment to create a tax code that does much more to reduce inequality and to resource long-overdue investments in climate, health, education and other essentials. Most immediately, the historic election shifts power, making it easier to deliver on the promise to increase the recently enacted $600 cash payments to $2,000 per person.

McConnell Balked at More Stimulus Aid to States, Betting Red States Wouldn’t Need It. Now?

December 4, 2020 | MEG WIEHE

Sen. McConnell has denied states—and their residents—relief for months. Congress must act now. Even if it does, it is unlikely to provide the robust aid needed to keep communities afloat and positioned for healthy recovery. Lawmakers across the country should be prepared to return to state capitals and city halls in the new year with plans to raise revenue not just to weather this crisis, but also to invest in long-term recovery.

COVID-19 Containment Is Key to Recovery—So Is Another Round of Stimulus

December 3, 2020 | AIDAN DAVIS

You can learn a lot about our leaders from how they act during times of crisis. This December, we are in our 10th month of the pandemic in the United States. With COVID cases climbing, deaths exceeding 270,000 and hospitalizations surpassing 100,000 for the first time, some states have halted reopening plans and imposed new restrictions. Containment of the virus is key to sustained economic recovery. As is another round of federal stimulus.

Of Shiny Objects and Scapegoats

September 24, 2020 | JENICE R. ROBINSON

While the moneyed elite were dangling shiny objects, scapegoating Black and brown people, denigrating immigrants, and financing studies to convince us that poor people are the problem, they were concurrently securing policies that cut taxes primarily for the rich and profitable corporations, deregulated industry, weakened unions and attacked voting rights. This and more allowed the rich to amass even more wealth and power.

The Rich Are Weathering the Pandemic Just Fine: Tax Them

September 3, 2020 | MEG WIEHE and CARL DAVIS

“Reductions in critical state and local investments, including health care and education, would only exacerbate the economic crisis brought on by COVID-19 and worsen racial and income inequality for years to come. Higher taxes on top earners are among the best options for addressing pandemic-related state revenue shortfalls in the coming months.”

COVID-19 and the Case for Race-Forward Economic Policy Prescriptions

March 24, 2020 | JENICE R. ROBINSON

Unconscious bias runs deep. Legislative proposals to assuage the exploding economic crisis are advancing and changing quickly, but initial GOP proposals are consistent with the nation’s long history of ostensibly race-neutral policies that are discriminatory in their outcomes.

Taxes in a Time of Coronavirus

March 13, 2020 | AMY HANAUER

Some problems can only be solved when public officials have the resources to act. Today’s public health crisis is that kind of problem. Unfortunately, the Trump administration’s deep tax cuts leave our health infrastructure knee-capped, just when we need it most.

Additional Resources

 

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News Releases

American Rescue Plan Uses Government Muscle to Tackle Big Economic Problems

March 10, 2021 | AMY HANAUER

“The American Rescue Plan is a monumental first step toward President Joe Biden’s pledge to build back better. The plan is a model for what inclusive, people-focused policymaking should be. Experts project the Child Tax Credit expansion will cut child poverty in half, a transformational accomplishment. The bill also helps meet immediate needs with direct cash payments that will go to 84 percent of households.”

ITEP: Senate Should Pass Rescue Plan without Delay

March 2, 2021 | AMY HANAUER

“The House-passed American Rescue Plan is the down payment we need for an inclusive economic recovery, and the Senate should pass it without delay.

“We went into this pandemic with a deeply unequal economy, and we still have 10 million fewer jobs than we did a year ago, while billionaire wealth has grown sharply. The American Rescue Plan will get financial help to all communities, while rightly focusing on those who were most likely to be living paycheck-to-paycheck before the pandemic and who have borne the brunt of the economic and health fallout.”

New Analysis: President Biden’s Proposed Child Tax Credit Expansion Would Reduce Poverty, Address Racial Disparities

January 26, 2021

President Biden’s proposed expansion to the Child Tax Credit (CTC) as part of his American Rescue Plan would provide a financial boost to most of the nation’s families with children, but it would be more robust for low-income families and address structural inequities that currently exclude a larger share of Black and Hispanic children from the credit, the Institute on Taxation and Economic Policy (ITEP) said.

ITEP: Biden’s American Rescue Plan Is the Start We Need to Right the Economy

January 14, 2021 | AMY HANAUER

We know that government interventions work. Research shows that federal spending from the March CARES Act helped prevent a poverty spike. When that aid dried up, more people struggled to financially stay afloat. COVID-19 has revealed our deeply unequal society. The rich have grown richer as more people have struggled to put food on the table and pay for housing. Lawmakers of both parties should commit to giving people the resources they need to weather this crisis and put in place bolder policies that will allow more people to share the nation’s prosperity.

COVID Relief Bill Will Help Families Now; Bigger, Bolder Package Needed in 2021

December 21, 2020 | AMY HANAUER

U.S. House and Senate leaders agreed on a $900 billion COVID relief package late Sunday, after more than six months of inaction, during which infection rates soared, more than 300,000 Americans died and the economy stayed weak. The bill contains unemployment compensation extension, eviction protections, vaccine distribution funds, help for schools and childcare, and other provisions to prevent families from tumbling further into economic chaos in this recession. Policymakers included cash payments which will help stabilize families and the economy.

GOP ‘Skinny Bill’ Rightly Fails, Too Skimpy for This Crisis

September 10, 2020 | AMY HANAUER

“Nearly one in eight households don’t have enough to eat. Millions are at risk of eviction. State and local governments are facing revenue shortfalls of well more than $500 billion, leading to inevitable layoffs and cuts to critical services. Knowing that, the Republican Senate put forth a so-called skinny COVID relief package that failed to address these concerns. Too skimpy for this crisis, the bill failed as it should have.”

Additional Releases:

 

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