Last Friday, President Trump signed into law the largest stimulus bill in American history, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act will provide billions of dollars of relief to individuals, businesses, state and local governments, and the health care system suffering the impact of the COVID-19 coronavirus in the United States. Although the program's price tag is $2.2 trillion, the economic impact is expected to approach nearly $7 trillion over the course of several economic cycles. Some of the key provisions include:
One-Time Financial Relief Payments
- All U.S. residents (meaning those that file with an ITIN are excluded, unless they have military service) with adjusted gross income up to $75,000 ($150,000 for married couples) would get a $1,200 ($2,400 for couples) “rebate” payment. They are also eligible for an additional $500 per qualifying child. The payments would start phasing out for earners above those income thresholds and would not go to single filers earning more than $99,000; head-of-household filers with one child, more than $146,500; and more than $198,000 for joint filers with no children.
- The federal government will use previous tax information to determine the amount tax units will receive. If the Internal Revenue Service already has bank account information for a tax unit, it will transfer the money via direct deposit based on the recent income-tax figures it has (2018 or 2019 if filed already).
- People who don’t pay taxes, such as those with very low incomes, may be hard to reach the way the program is designed.
- An excellent FAQ article by the New York Times that goes into greater detail can be found HERE.
- $250 billion to extend the unemployment insurance program by expanding eligibility and offer workers an additional $600 per week for four months, on top of what state programs pay ($450 per week in California) to make make up for 100% of lost wages.. It also extends UI benefits through Dec. 31 for eligible workers. The deal applies to the self-employed, independent contractors and gig economy workers. The final agreement provides an extra month of unemployment benefits than what Senate Republicans had originally sought.
- Again, the New York Times article goes into greater detail on UI.
Tax Cuts for Businesses: CPA Practice Advisor have compiled the following data summarizing the tax cuts for businesses.
- A refundable 50 percent payroll tax credit for businesses affected by the coronavirus, to encourage employee retention. Employers would also be able to defer payment of those taxes if necessary. This retention tax credit is for eligible employers that continue to pay employee wages while their operations remain fully or partially suspended as a result of specific COVID-19-related government orders
- Loosened tax deductions for interest and operating losses
- Suspension of penalties for people who tap their retirement funds early
- Tax write-offs to encourage charitable deductions and encourage employers to help pay off student loans
While as of today there are no federal rules, regulations, guidelines, or application forms yet for most of these loan programs, UWCA is tracking this as closely as possible and will provide guidance on the process as it becomes clear.
For more information, including a side by side comparison of the two loan programs please visit HERE, created by the Certified Public Accounting and Consulting firm KROST. Information is subject to change, as federal guidelines and applications become available.
Housing & Homelessness
- More than $7 billion for affordable housing and homelessness assistance programs. This funding will help low-income and working-class Americans avoid evictions and minimize any impacts caused by loss of employment and child care or other unforeseen circumstances related to COVID-19.
- $25 billion in aid to transit systems to help protect public health and safety while ensuring access to jobs, medical treatment, food and other essential services.
Community Development Block Grants
- More than $6.5 billion in federal funding for Community Development Block Grants, the Economic Development Administration and the Manufacturing Extension Partnership to help mitigate the local economic crisis and rebuild impacted industries such as tourism or manufacturing supply chains.
- $15.85 billion to help veterans, including to help treat COVID-19, purchase test kits, and procure personal protective equipment for clinicians, and $590 million in dedicated funding to treat vulnerable veterans, including homeless veterans and those in VA-run nursing homes.
- $450 million for The Emergency Food Assistance Program (TEFAP) to assist food banks across the country.
- $425 million to increase access to mental health services in communities.
- $400 million in election assistance for the states to help prepare for the 2020 election cycle, including to increase the ability to vote by mail, expand early voting and online registration and increase the safety of voting in-person by providing additional voting facilities and more poll workers.
Shortfalls of the Bill: As important as the relief package is for Americans, it also has several shortfalls that will require attention in the near future. The Center on Budget and Policy Priorities (CBPP) have highlighted 3 key shortalls to consider going forward as future bills are considered:
- Uninsured: The package fails to include measures either to expand health coverage or to cover COVID-19 treatment for those who are uninsured. Such steps are essential now. The omission of these measures stands in contrast to a proposal Speaker Pelosi made earlier this week, which would help uninsured people get coverage through Medicaid or the marketplaces and cover COVID-19-related costs for those who still slip through the cracks.
- SNAP Benefits: The legislation also fails to increase SNAP benefits. Such an increase, provided in the last recession, is important to help struggling families put food on the table and help provide the boost to consumer spending that the economy needs. The temporary SNAP benefit increase enacted in the Great Recession was both critical to preventing far larger increases in poverty and effective as economic stimulus.
- Lack of State Fexibility: In addition, the package does not include flexible funding for states to help very poor families with children avert crises, as Congress did in 2009-2010, when it provided modest but vital funding for what was known as the TANF (Temporary Assistance for Needy Families) Emergency Fund. That fund provided resources to states to help more families meet basic needs and avoid emergencies that could put them on a downward spiral, as well as providing subsidized jobs to both parents and young people to help them stay connected to the labor force. The next legislative package should include such an emergency fund, with its purposes broadened to respond to the needs of both poor families with children and other poor individuals and households.
For more information, please visit their article.