Following is a statement from Amy Hanauer, executive director of the Institute on Taxation and Economic Policy, regarding the COVID-19 relief deal reached Sunday night.
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.
ITEP’s updated analysis of the state-by-state impact of the cash payments of $600 to adults and children reflects late changes to this provision, which will deliver $2,400 to many families of four. The payments will go to some left out of the CARES Act, which required every member of a household to have a Social Security Number. The latest legislation includes U.S. citizens who live in households with undocumented immigrants who pay taxes using a special number (called ITIN filers) and makes those payments retroactive to the CARES act from March, helping up to 1.7 million adults and 3.7 million children. Lawmakers excluded adult dependents, some older teenagers, and ITIN filers themselves, leaving out many adults with disabilities and millions of undocumented immigrants who disproportionately work in jobs deemed essential.
At Republican insistence, the bill contains a provision allowing corporations to deduct the cost of business meals, referred to as the “three-martini lunch deduction” – a deduction that liberal and conservative economists have said is a bad idea.
The package temporarily lets people use their earned income from tax year 2019 to determine the Earned Income Tax Credit and the refundable portion of the Child Tax Credit in the 2020 tax year. This provision, championed by Senator Sherrod Brown, will enable workers whose wages dropped during the pandemic to get a larger refund consistent with earnings from prior years.
Republicans pulled direct state and local fiscal relief out of the package, insisting that it be paired with a provision curtailing the rights of workers and consumers to seek relief if corporate negligence harms them. This aid should be approved in January: preserving state and local jobs and services improves communities, keeps families afloat, and hastens economic recovery.
The deal provides less than needed because Republican leaders insisted on an arbitrary price limit. It nonetheless contains essentials to address the health crisis and help struggling families in the short term. Congressional leaders should work in the new year to provide a more robust package that will do more to help Americans survive the crisis and to restore the economy.