Monday, November 30, 2020

U.S. Senate Passes Update to $2.2 Trillion Coronavirus Aid, Relief and Economic Security Act

By on March 26, 2020

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Emergency Bill Aims to Contain Pandemic’s Fallout

SAN JUAN — The U.S. Senate passed late Wednesday evening an updated version of the Coronavirus Aid, Relief and Economic Security (CARES) Act. Amid the wake of the novel coronavirus pandemic and resulting economic repercussions, the estimated $2.2 trillion bill succeeds the recently passed $8.3 billion in public health support and the Families First Coronavirus Response Act.

The CARES Act, reportedly the largest economic relief bill ever passed, builds on the two former pieces of legislation by providing more support to individuals and businesses, including changes to tax policy. The Tax Foundation, a conservative Washington, D.C. think tank listed the following key components of the bill:

  • “Expanded unemployment insurance (UI) for workers, including a $600 per week increase in benefits for up to four months and federal funding of UI benefits provided to those not usually eligible for UI, such as the self-employed, independent contractors, and those with limited work history. The federal government is incentivizing states to repeal any “waiting week” provisions that prevent unemployed workers from getting benefits as soon as they are laid off by fully funding the first week of UI for states that suspend such waiting periods. Additionally, the federal government will fund an additional 13 weeks of unemployment benefits through December 31, 2020 after workers have run out of state unemployment benefits.
  • “$350 billion allocated for the Paycheck Protection Program, which is meant to help small businesses (fewer than 500 employees) impacted by the pandemic and economic downturn to make payroll and cover other expenses from February 15 to June 30. Notably, small businesses may take out loans up to $10 million—limited to a formula tied to payroll costs—and can cover employees making up to $100,000 per year. Loans may be forgiven if a firm uses the loan for payroll, interest payments on mortgages, rent, and utilities and would be reduced proportionally by any reduction in employees retained compared to the prior year and a 25 percent or greater reduction in employee compensation.
  • “Recovery Rebate for individual taxpayers. The bill would provide a $1,200 refundable tax credit for individuals ($2,400 for joint taxpayers). Additionally, taxpayers with children will receive a flat $500 for each child. The rebates would not be counted as taxable income for recipients, as the rebate is a credit against tax liability and is refundable for taxpayers with no tax liability to offset. The rebate phases out at $75,000 for singles, $112,500 for heads of household, and $150,000 for joint taxpayers at 5 percent per dollar of qualified income, or $50 per $1,000 earned. It phases out entirely at $99,000 for single taxpayers with no children and $198,000 for joint taxpayers with no children. 2019 or 2018 tax returns will be used to calculate the rebate advanced to taxpayers, but taxpayers eligible for a larger rebate based on 2020 income will receive it in the 2020 tax season. Taxpayers with higher incomes in 2020 will see the overpayment associated with their rebate forgiven. For example, a single taxpayer with $100,000 in 2019 income would not receive an advance rebate but would receive the $1,200 credit on their 2020 return if their income for the year fell below the phaseout. On the other hand, a single taxpayer with $35,000 in income receives a $1,200 advance rebate but would not have to pay the rebate back on the 2020 return if they make $100,000 this year.”

According to the Tax Foundation General Equilibrium Model, the think wrote: “We estimate the rebate will decrease federal revenue by about $301 billion in 2020,” adding, “This credit is one-time, but policymakers may consider additional rebates if the downturn is prolonged.”

The legislation now goes to the House, which is expected to pass it Friday by remotely voiced vote.

Earlier Wednesday, Senate Majority Leader Mitch McConnell gave the following remarks:

“It has only been 65 days since the first American tested positive for the new coronavirus on our soil.

“In barely two months, this pandemic has upended our nation.

“As of this morning, more than 175 million Americans have been advised to remain in their homes. More than half of our people are effectively sheltering in place.

“Hospitals in major cities are pushing capacity. Doctors and nurses are exhausting crucial supplies.

“And if it were not enough for Americans to fight to stay healthy, they are also fighting to keep their paychecks, to keep supporting their families.

“Combating this disease has forced our country to put huge parts of national life on pause and triggered layoffs at a breathtaking pace.

“This strange new reality has forced our nation onto something like a wartime footing.

“A fight has arrived on our shores. We did not seek it. We did not want it. But now, we are going to win it.

“Ten days ago, I laid out four urgent priorities for new Senate legislation to help our nation through this crisis.

“We had to get direct financial assistance to the American people…

“Get historic aid to small businesses to keep paychecks flowing…

“Stabilize key industries to prevent mass layoffs…

“And, of course, flood more resources into the front-line healthcare battle itself.

“One week ago, Senate Republicans laid down an initial proposal that tackled each of these emergency missions.

“Our members put forward bold plans to send cash to households. Stand up historic emergency loans for Main Street. Stabilize key sectors. And put the full might of Congress behind our doctors, nurses, hospitals, healthcare providers, and the race for treatments and vaccines.

“I couldn’t be prouder of our colleagues.

“Our nation needed us to go big, and go fast, and they did.

“The creative policies our chairmen crafted in just a couple days’ time remain the central building blocks of the proposal we will pass today.

“But Republicans knew the nation had no time for conventional political gamesmanship. So the instant we released our first draft, I created a series of bipartisan working groups.

“I asked Republicans and Democrats to work together around the clock to make the bill even better.

“By Sunday, we had an updated proposal that was even stronger and contained even more ideas literally from both sides.

“Republicans and Democrats had worked together to dramatically strengthen and rework unemployment insurance during this crisis.

“We had worked together to make sure lower-income families could receive the full cash assistance. And on and on.

“I will leave it to others to compare the bipartisan Sunday bill to the final version we will pass today and determine whether the last few changes really required or merited these three days of delay, in the face of this worsening crisis.

“But that Washington drama does not matter anymore. The Senate is going to stand together, act together, and pass this historic relief package.

“Struggling Americans are going to go to their mailboxes and find four-figure checks to help with their bills… because the Senate stepped up.

“Many American families who have poured everything into a restaurant, or a shop, or a small manufacturer are going to keep making payroll and keep their businesses alive… because the Senate stepped up.

“Hundreds of thousands of workers in key sectors who might well have been laid off through no fault of their own will instead get to keep their job and continue their career… because the Senate stepped up.

“And for the healthcare heroes who leave their own sleeping children and drive to the hospital for the all-night shift…

“Who spend hour after hour healing the sick, comforting strangers, and literally battling this disease…

“There will be more masks in their supply closets, more funding for their hospitals, and soon, more new treatments to administer to their patients…

“Because the Senate stepped up.

“So today, the Senate will act to help the people of this country weather this storm.

“Nobody thinks legislation can end this. We cannot outlaw this virus.

“And no economic policy could fully end the hardship so long as the public health requires that we put so much of our nation’s commerce on ice.

“This is not even a stimulus package. It is emergency relief.

“No, this fight is not going to be won or lost in Washington D.C. It is the American people who will beat this virus.

“Americans will keep making sacrifices to slow down the spread. Americans will keep pitching in and looking after each other. Americans will keep finding creative ways to stand united — even if they have to stand six feet apart.

“We’ll win this fight because of people like Amy Jean Tyler, a stay-at-home mom in Oldham County, Kentucky, who is leading a drive to sew cotton masks for a local children’s hospital.

“We’ll win this fight because of people like Pastor Grant Hasty in Stearns, Kentucky who’s gathered volunteers to distribute more than 550 homecooked meals.

“We’ll win this fight because of people like Peg Hays, who runs a distillery in Christian County, Kentucky and is temporarily converting her bourbon-making facilities to churn out hand sanitizer.

“We’ll win this fight because national companies are switching production lines to make medical supplies.

“Because our largest high-tech companies are partnering with the government to throw supercomputing power into the race for vaccines.

“We’ll win this fight because of families, neighbors, and church communities that cannot even worship together in person.

“Because of small businesses. Big businesses. Public-health PhDs and local entrepreneurs.

“It has been 18 years since every American was united in amazement and prayer as firefighters and first responders rushed into burning buildings on September 11th, 2001.

“In the coming days and weeks, our nation is going to meet new heroes.

“Many may be police, firefighters, and EMTs once again.

“Many others will be truck drivers, grocery-store clerks, and pharmacists who literally keep our supply chains running.

“Utility workers and delivery drivers who leave their homes so everyone else can remain in theirs.

“Teachers who somehow manage to keep educating their students over the Internet while looking after their own kids at the same time.

“And most of all, we’re going to meet a whole lot of American heroes who wear scrubs, and masks, and gloves.

“Heroes who rush toward the sick, and wash their hands until they bleed, and work around the clock to heal our friends and our families.

“When our nation comes through this and takes flight again on the other side, it will be because American heroes won this fight.

“All the Senate can do is give them the resources to do it.

“So that’s exactly what we are going to do today.”

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