Second Stimulus Checks Vs. $4,000 Travel Tax Credit: Pros And Cons
Will you get a second stimulus check or a $4,000 travel tax credit in the next stimulus?
Here’s what you need to know.
Second Stimulus Checks
Many Americans are hoping for a second stimulus check. More than 40 million Americans have filed for unemployment. In many sectors of the economy — from restaurants to retail to travel — jobs have been lost, profits have suffered and bankruptcies have been filed. Congress authorized a first stimulus check through the CARES Act, which was the $2.2 trillion financial stimulus package. The stimulus check was up to $1,200 for each individual and $500 for each dependent. While millions of Americans already have received their stimulus check, others may not receive their stimulus check until this summer. Will there be a second stimulus check? Here are some of the pros and cons of a second stimulus check, among others:
Pros
Provides direct money to the American people
Helps people provide for their family and pay their living expenses
Encourages recipients to spend money to boost the economy
Cons
The cost of a second stimulus check is high
A second stimulus check may not stimulate the economy
A second stimulus check doesn’t directly create new jobs
If there is a second stimulus check, there have been multiple proposals about the potential size. For example, House Democrats passed the Heroes Act, which is a $3 trillion stimulus bill. The Heroes Act includes a second stimulus check of up to $1,200 for each individual and $1,200 for each dependent (with a maximum of three dependents). Former presidential candidates Sen. Kamala Harris (D-CA) and Andrew Yang proposed that you get a $2,000 a month stimulus check. This monthly stimulus check builds on Yang’s proposal for universal basic income of $1,000 a month for life. Harris, Sen. Bernie Sanders (I-VT) and Sen. Ed Markey (D-MA) introduced the Monthly Economic Crisis Support Act in Congress, which would pay you a second stimulus check of $2,000 a month for each individual and $2,000 a month for each individual (up to a maximum of three dependents). Billionaire entrepreneur and Shark Tank star Mark Cuban proposed a $1,000 stimulus check every two weeks.
$4,000 Travel Tax Credit
Will there be a $4,000 travel tax credit in the next stimulus? According to the U.S. Hotel Association, a $4,000 travel tax credit could give you up to $4,000 in tax credits for domestic vacation expenses at hotels, restaurants, theme parks and other travel-related businesses through the end of 2021. In May, President Donald Trump floated the idea at a White House roundtable with restaurant executives and industry leaders. “Create an “Explore America” — that’s “Explore,” right?” Trump said. “Explore America tax credit that Americans can use for domestic travel, including visits to restaurants. That’s a big deal.” Here are some of the pros and cons of a $4,000 travel tax credit, among others:
Pros
Helps revive the travel, restaurant and tourism sectors of the economy
Encourages recipients to spend money to boost the economy
Creates demand for more jobs, which can reduce unemployment
Cons
This would be a tax credit, not direct money
Safety concerns surrounding Covid-19 and a second wave
The cost of a travel tax credit could be high
Is a second stimulus check or $4,000 travel tax credit more likely?
The Trump administration appears open to both a second stimulus check and a $4,000 travel tax credit. However, there is a lower likelihood for a second stimulus check. Therefore, don’t expect a second stimulus check. Senate Republicans, including Senate Majority Leader Mitch McConnell (R-KY), don’t support a second stimulus check. There are two primary reasons: the relatively high cost and other legislative priorities to stimulate the economy. The Trump administration appears most focused on stimulating the economy through job growth. This includes a focus on manufacturing jobs, infrastructure spending, a payroll tax credit, a return to work bonus and other related incentives. A travel tax credit, if it’s included in the next stimulus, appears to tie more closely to this philosophy. Why? A travel tax credit could support the administration’s focus on direct spending in the economy and also has the potential to create more jobs in sectors of the economy that have been hit disproportionately due to Covid-19.
REFERENCE: FORBES