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

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

National and state-by-state data

Tax Rebates in the CARES Act

National and state-by-state data

An Updated Analysis of a Potential Payroll Tax Holiday

July 21, 2020 | STEVE WAMHOFF, JESSICA SCHIEDER and MATTHEW GARDNER

ITEP estimates that if Congress and the president eliminated all Social Security and Medicare payroll taxes paid by employers and employees from September 1 through the end of the year, 64 percent of the benefits would go the richest 20 percent of taxpayers and 24 percent of the benefits would go to the richest 1 percent of taxpayers, as illustrated in the table below. The total cost of this hypothetical proposal would be $336 billion.

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.

Republican Tax Credit Proposal Would Provide New Breaks to Tax Avoiders Like Amazon and Netflix

June 30, 2020 | MATTHEW GARDNER and STEVE WAMHOFF

While tax policy is on the mind of virtually no one in America right now, White House officials continue to discuss tax cuts in response to the COVID-19 pandemic. Steve Wamhoff provides a roundup of these terrible ideas that would do little to boost investment or reach those who need it most.

McSally “Travel Tax Credit” Is an Invitation for Tax Avoidance

June 23, 2020 | MATTHEW GARDNER

Earlier this week, U.S. Sen. Martha McSally (R-AZ) introduced the “American TRIP Act,” a bill ostensibly designed to encourage Americans to boost the economy by traveling within the United States. The bill is certainly a trip in the colloquial sense of the word.

National and State-by-State Estimates of House-Passed Improvements in Tax Credits for Workers and Children

June 18, 2020 | STEVE WAMHOFF

Among other important provisions, the HEROES Act includes reforms to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) to make these tax credits more effective in helping working people and helping parents afford the costs of raising children.

Trump Administration Stops Pretending to Care About the Economy with Its Capital Gains Tax Proposal

May 28, 2020 | STEVE WAMHOFF

The Trump administration is now floating a temporary capital gains tax break, which would only reward investments made in the past while doing nothing to encourage new investment.

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

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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

Sales Tax Holidays: An Ineffective Alternative to Real Sales Tax Reform

July 29, 2020 | Dylan Grundman

Lawmakers in many states have enacted “sales tax holidays” (16 states will hold them in 2020) to provide a temporary break on paying the tax on purchases of clothing, school supplies, and other items. These holidays may seem to lessen the regressive impacts of the sales tax, but their benefits are minimal while their downsides are significant—and amplified in the context of the COVID-19 pandemic. This policy brief looks at sales tax holidays as a tax reduction device.

RELATED: A Cautionary Tale on Sales Tax Holidays During a Pandemic

New Fiscal Year Brings New Challenges and Opportunities in the States

July 1, 2020 | KAMOLIKA DAS

July 1—the start of the new fiscal year in most states—typically marks a point when one can take a step back and reflect on the wins and disappointments of the past state legislative sessions. 2020 is markedly different.

COVID-19 Unveils Need for Fair Taxation at the State Level

June 11, 2020 | BEN CHIN, Maine’s People Alliance

Most people assume that the federal government is the main—if not only—agent for ensuring economic stability and recovery in response to COVID. Yet, the fight for tax fairness at the state level will have a dramatic impact on economic recovery.

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 7/22: The Heat Is On

State Rundown 7/16: States Still Reluctant to Talk Taxes

State Rundown 7/1: Happy New Year?

State Rundown 6/26: States Take Varying Fiscal Approaches While Awaiting Federal Action

Read previous State Rundowns

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Corporate Tax Cuts

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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

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A Hero vs a Heel: No Contest

July 28, 2020 | AMY HANAUER

Americans are demanding policy that meets the needs of this urgent moment. There are now competing proposals from the U.S. House and Senate: One is a reasonable response to the staggering crisis we’re in. One is not.

Treasury Secretary Mnuchin to Unemployed Workers: Don’t Worry, Get a Bank Loan   

July 24, 2020 | JENICE R. ROBINSON

In an explanation that can only be called richsplaining, Treasury Secretary Steve Mnuchin on Thursday suggested that Congress’s delay in approving expanded unemployment benefits was no problem because banks would extend loans to people in the meantime.

White House Incredibly Still Believes Tax Cuts Are the Answer to America’s Problems

June 2, 2020 | STEVE WAMHOFF

While tax policy is on the mind of virtually no one in America right now, White House officials continue to discuss tax cuts in response to the COVID-19 pandemic. Steve Wamhoff provides a roundup of these terrible ideas that would do little to boost investment or reach those who need it most.

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.

New Analysis: Payroll Tax Cut Would Cost $336 Billion, Benefit Top 1 Percent Most

July 21, 2020

Temporarily eliminating all federal payroll taxes through the end of the year would cost $336 billion, deliver 64 percent of its benefits to the richest 20 percent of households and fail to provide help to unemployed workers who are struggling most due to the economic downturn, the Institute on Taxation and Economic Policy said today.