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


Tax Rebates in the CARES Act

National and state-by-state data

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.

Harris-Sanders-Markey Cash Payment Proposal Would Dwarf Checks Sent Under the CARES Act

May 8, 2020

Sens. Kamala Harris, Bernie Sanders and Edward Markey released a proposal to provide a monthly payment of $2,000 for each member of a household (including up to three dependents), with benefits phased out at income levels starting at $200,000 for married couples.

Trump’s Latest Tax Break Proposals Include Everything—Except Helping Regular People

May 6, 2020 | STEVE WAMHOFF

None of the tax proposals considered by the administration would provide help to those who need it or do much, if anything, to boost investment.

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.

Addressing the COVID-19 Economic Crisis: Advice for the Next Round

April 7, 2020 | STEVE WAMHOFF

Americans need many things right now beyond tax cuts or cash payments. But for people whose incomes have declined or evaporated, money is the obvious, immediate need to prevent missed rent or mortgage payments, skipped hospital visits and other cascading catastrophes. So, what should Congress do next to get money to those who need it?

How the Tax Rebate in the Senate’s Bill Compares to Other Proposals

March 25, 2020 | STEVE WAMHOFF

Congress passed a $2 trillion plan that includes $150 billion in fiscal aid to states, $150 billion in health care spending, large expansions of unemployment compensation and more. ITEP has provided several analyses showing that the rebate in the current bill is an improvement over a previous GOP proposal but still falls short of the benefits offered under Democratic proposals.

ANALYSIS: House Democratic Stimulus Bill Explained

March 24, 2020 | STEVE WAMHOFF and MEG WIEHE

Following the failure of a modified Senate GOP bill that put corporations over workers and families, the House Democrats released their own bill that was far more comprehensive and better targeted.

State-by-State Estimates: Modified Senate GOP Stimulus Bill Still Falls Short

March 23, 2020 | STEVE WAMHOFF and MEG WIEHE

The modified GOP Senate stimulus bill voted down earlier in March is a slight improvement over the first GOP proposal, but it still fails to prioritize workers and families or provide fast relief to those who need it most.

Why the GOP Senate Bill Fails to Address the Crisis, and Why a Democratic Bill Looks More Promising

March 20, 2020 | STEVE WAMHOFF and MEG WIEHE

On March 19, Senate Majority Leader Mitch McConnell released a bill that reportedly cost more than $1 trillion, most of which would go toward breaks for corporations and other businesses. A provision in the bill to provide payments to families would cost about $216 billion, according to a new ITEP analysis, which also finds that the plan is specifically designed to deny benefits to certain low-income people.

Checks to All vs. Trump’s Payroll Tax Cut

March 17, 2020 | STEVE WAMHOFF

A payroll tax cut would help those lucky enough to keep their job and would provide a bigger break to those with more earnings. Sending checks to every household would be a far more effective economic stimulus because it would immediately put money in the hands of everyone who would likely spend it right away, pumping it back into the economy.

See also: Payroll Tax Cut Elimination

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State Policy


Tax Rebate Proposal in the CARES Act

National and state-by-state data

It’s Time to Rethink Those Tax Cuts

April 20, 2020 | AIDAN DAVIS

The full effect of the coronavirus pandemic on state revenue streams remains largely unknown. One key policy option is to reevaluate recent misguided tax cuts—particularly those that have not yet taken full effect and will add to growing revenue shortfalls in the coming years.

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

April 15, 2020 | DYLAN GRUNDMAN 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.

Related reading:

State Rundown 5/20: State Revenue Crisis Getting Clearer…and Scarier

State Rundown 5/7: State Fiscal Responses to Pandemic Starting to Get Real

State Rundown 4/29: State Responses and Federal Aid Could Be Among “May Flowers” to Come

State Rundown 4/22: Earth Day Lessons from Pangea to Pandemic

State Rundown 4/15: Tax Day Delayed but Other Important Work Accelerated

State Rundown 4/9: Pandemic’s Fiscal Effects Slowly Coming into Focus

State Rundown 3/26: Pandemic’s Health and Fiscal Fallout Continues to Grow

State Rundown 3/19: Spring Is Here but States Brace for Long Winter

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Corporate Tax Cuts


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


HEROES Act is an Appropriate Recession Response

May 12, 2020 | AMY HANAUER

House Democrats introduced a proposal that responds to our staggering economic crisis with the right policies at the necessary scale. It’s a refreshing change from some of the misdirected ideas that have passed or been floated in these alarming economic times.

Which Workers Wouldn’t Be Helped by a Payroll Tax Cut?

May 8, 2020 | JESSICA SCHIEDER

New data released today provides more detail about which workers have lost their jobs during this economic crisis—and so also who would be left out of any benefits provided by a payroll tax cut.

Trump’s Payroll Tax Cut Makes Even Less Sense as Job Losses Mount

May 5, 2020 | STEVE WAMHOFF

To state the obvious, unemployed workers need the most help right now, and suspending the payroll tax will do nothing to help them. The ultimate winners would be the owners of corporations (the shareholders) and business owners, who are disproportionately high-income individuals and households.

Intended Consequences: Deliberate Disinvestment Caused Florida’s Unemployment Disaster

May 4, 2020 | STEPHANIE CLEGG

Florida politicians deliberately rigged the unemployment system after the Great Recession to avoid raising taxes on businesses. Now, in a pandemic, some out-of-work residents are left waiting more than six weeks for unemployment benefits while more than 280,000 others have been inexplicably denied. What’s happening in Florida underscores deeper challenges with systems that should help those in need, but instead are designed to fail them.

Two Pandemics, Separate and Unequal

May 1, 2020 | JENICE R. ROBINSON

COVID-19 has revealed a policy apparatus that reflexively prioritizes those who need it least, a wholly inadequate safety net, an underfunded public health infrastructure, and an inefficient national health stockpile. If the nation stays this course, it will make only cosmetic restorations to a shoddily built house.

Sales Tax Policy in a Pandemic: Exemptions for Digital Goods and Services are More Outdated Than Ever

April 29, 2020 | ESTEFAN HERNADEZ ESCOTO

Many states are making the decline in sales tax collection worse by failing to apply their sales taxes to digital goods (such as downloads of music, movies, or software) and services (such as digital streaming). A state that taxes movie theater tickets but not digital streaming, for instance, is needlessly hastening the decline of its own sales tax.

To Avoid the CARES Act’s Flaws, Invest in Automatic Relief

April 23, 2020 | JESSICA SCHIEDER

With adequate automatic stabilizers, the United States might not end up with economic relief bills that have provisions tucked in them mostly helping millionaires, as we learned was the case with a CARES Act provision suspending limits on business losses. And regular people could get help more quickly, blunting the economic downturn.

Morally and Economically, Including Undocumented Immigrants Is the Right Thing to Do

April 17, 2020 | ITEP STAFF

Undocumented immigrants pay taxes & play an integral role in our country’s social and economic welfare, yet Congress left them almost entirely out of the CARES Act. Fortunately, immigrants, workers and allies are helping policymakers advance better policy.

History, Economic Justice, and COVID-19

April 15, 2020 | AMY HANAUER

Our elected officials have to listen to we the people and change their approach. Going forward, corporate voices cannot continue to steer. Instead, families, communities and working individuals have to lead our policymaking so it better helps people struggling now.

Returning to the Economic Status Quo After COVID-19 Crisis Should Not Be an Option

April 6, 2020 | JENICE R. ROBINSON

It will take immense imagination, unyielding political will and a fundamental reordering of our policy priorities to adequately address the problems of this moment and unrig our economy.

Federal Relief Bill Doesn’t Go Far Enough: Q&A with Meg Wiehe

April 2, 2020 | STEPHANIE CLEGG and MEG WIEHE

The final version of the Coronavirus Aid, Relief and Economic Security (CARES) Act enacted last week included rebate provisions that will reach most low-, moderate- and middle-income adults and children, but not everyone. Meg Wiehe sits down for a Q&A to discuss who benefits from the rebate provision, who is excluded and how states can respond to support communities.

House Democrats’ Suggestion of Retroactively Repealing SALT Cap is a Poor Emergency Relief Measure

March 31, 2020 | STEVE WAMHOFF

The House Democrats have plenty of ideas to help workers and families and boost the economy, but Speaker Nancy Pelosi’s recent idea to repeal the cap on deductions for state and local taxes (SALT) is not one of them.

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.

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News Releases


ITEP: White House Seeks to Exploit COVID-19 Crisis to Enact Unpopular Tax Cuts

May 6, 2020 | AMY HANAUER

“President Trump is exploiting the current COVID-19 crisis to continue his drive to enrich the wealthiest and starve the public of resources that are essential to address escalating health and economic needs across the country.”

Making Decisions on Federal Relief Based on Blue v. Red States is Morally Bankrupt

April 24, 2020 | MEG WIEHE

“Elected officials who pick winners and losers are defying democracy, being derelict in their duty to serve all their constituents and revealing a warped vision of what economic recovery should look like and for whom government should work.”

Congress Must Provide More Relief to States

April 22, 2020 | AMY HANAUER

“State budgets have already taken an enormous hit due to the necessary halting of economic activity to curb the COVID-19 public health crisis. The initial $150 billion in the CARES Act will help states, but it’s simply not enough to address the enormity of this economic crisis.”

Tax Cuts for Millionaires in the CARES Act Violates Public Trust

April 14, 2020 | AMY HANAUER

“Public trust and the broad agreement that families and communities needed immediate relief from the economic crisis allowed the $2.2 trillion economic relief package to move quickly through Congress. Yet during a crisis in which thousands have lost their lives and millions are losing their jobs, their health care and their retirement security, some of our lawmakers snuck in tax benefits for the nation’s richest families.”

The Job Is Not Yet Done: ITEP Statement on the $2 Trillion Relief Package

March 27, 2020 | AMY HANAUER

“Our elected officials must understand that we’re not finished. In the long-term, we need to take legislative and regulatory steps at the state and federal levels to unrig our economy. Right now, we need to keep families afloat and make sure they have access to health care, can stay in their homes and can put food on the table. The next round of assistance-and there must be a next round-should be much more focused on people, families, local government and communities.”

New Analysis Shows Average Rebate Benefit for Families in the Senate Stimulus Bill

March 25, 2020

The Senate agreed to a compromise stimulus bill last night that improves on flaws in its initial bill but still fails to go as far as other proposals and leaves out immigrants who file taxes via Individual Taxpayer Identification Numbers (ITIN), the Institute on Taxation and Economic Policy said today.

New Analysis: Revised GOP Stimulus Proposals Still Fails to Meet Critical Needs

March 23, 2020

The revised GOP stimulus proposal still fails to do enough for struggling families while providing a no-strings-attached bailout to corporations, the Institute on Taxation and Economic Policy said today.

Senate Bill Addresses Unprecedented Health and Economic Crisis with Wrong-Headed Corporate Tax Cuts

March 19, 2020 | AMY HANAUER

“People across the U.S. are reeling. Stores are closing. Travel is restricted. Unemployment is spiking. Families and communities need universal help. This bill does not meet the needs of this moment and will leave us with an economy that can’t recover.”

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Payroll Tax Cut Elimination


Trump’s Payroll Tax Cut Makes Even Less Sense as Job Losses Mount

May 5, 2020 | STEVE WAMHOFF

To state the obvious, unemployed workers need the most help right now, and suspending the payroll tax will do nothing to help them. The ultimate winners would be the owners of corporations (the shareholders) and business owners, who are disproportionately high-income individuals and households.

Trump’s Proposed Payroll Tax Elimination

March 13, 2020 | STEVE WAMHOFF

President Trump has proposed to eliminate payroll taxes that fund Social Security and Medicare through the end of the year. ITEP estimates that this would cost $843 billion and 65 percent of the benefits would go to the richest 20 percent of taxpayers, as illustrated in the table below.

ITEP Report on President’s Misguided Payroll Tax Proposal

March 13, 2020 | STEVE WAMHOFF

In early March, ITEP analyzed what would happen if Congress and the President repeated the 2 percentage-point cut in the Social Security payroll tax that was enacted for two years during the last recession. Little did we know that President Trump was about to propose something far more radical: eliminating all Social Security and Medicare payroll taxes for the rest of the year.

Trump’s Proposed Payroll Tax Cut Is Not the Right Answer

March 13, 2020 | STEVE WAMHOFF

The Trump administration is floating a cut in the Social Security payroll tax as a measure to counteract a potential economic downturn related to the COVID-19 virus. It should go without saying that a public health crisis requires government interventions that have nothing to do with taxes. But even if policymakers want to find ways to stimulate the economy beyond solving the health crisis, the payroll tax cut is not likely to be very effective.

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