As lawmakers explore options for “Phase 4” coronavirus relief legislation, one idea that has received renewed attention is allowing businesses to cash out business tax credits. This proposal would be strengthened by also permitting acceleration of firms’ accrued net operating loss (NOL) deductions and designing the proposal so that firms can quickly convert these tax assets into cash.
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While other states are starting to think about the recovery, California is contemplating tax policies that would stand in the way of economic expansion once the health crisis abates. California’s shortfall is all too real, but tax policies which impede recovery are a hindrance, not a help.
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One of the most cost-effective policy changes would be to make full expensing of machinery and equipment permanent and extend this important tax treatment to structures as well as for firms in a net operating loss position.
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Many states are racing to pass budgets, emergency COVID-19 supplemental appropriations, and other must-pass legislation as quickly as possible. We’re tracking the latest state legislative responses to the coronavirus crisis.
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Countries around the world are implementing emergency tax measures to support their economies under the coronavirus (COVID-19) threat.
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During the coronavirus outbreak, Italy has been hit especially hard. Policymakers have introduced numerous measures to stem the spread of the virus and provide relief to businesses that are facing a severe downturn.
2 min readTax policy can help by giving businesses current access to future tax “assets”—deductions and credits the businesses will be allowed or owed over time any way under current law—instead of making them wait.
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Governmental responses to the coronavirus outbreak will require creativity and flexibility—and one aspect of that may involve temporarily rethinking how we structure not only unemployment insurance (UI) benefits but also the taxes that pay for them.
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The House bill would provide two weeks of paid sick leave to workers who must quarantine, take care of a family member who is sick with coronavirus, or care for their children whose school or daycare has closed due to the public health emergency.
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Instead of simply reaching for fiscal stimulus with the goal of increasing economic activity, tax policy changes can give vulnerable individuals and businesses additional liquidity and space to survive the reduction in economic activity needed in light of the coronavirus outbreak.
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The bill, the Families First Coronavirus Response Act, would expand federal medical leave, create an emergency paid sick leave requirement, and provide tax credits against employer-side payroll taxes to help offset the cost of these two programs, among other provisions.
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Full expensing is one of the most powerful pro-growth policies in terms of revenue forgone. Given that structures comprise a large share of the private capital stock, improving their tax treatment would end a large bias against investment in the tax code.
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Investments in worker training and education can increase productivity and economic output as growth in human capital accumulates, though the time horizon for these effects is longer than that of physical capital accumulation.
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Understanding the channel through which a tax policy change is expected to affect the economy is crucial. Absent this understanding, we are likely to reach the wrong conclusions on what sound tax policy looks like and what changes would improve the tax code.
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The IRS recently released the new 2020 tax brackets and rates. Explore updated credits, deductions, and exemptions, including the standard deduction & personal exemption, Alternative Minimum Tax (AMT), Earned Income Tax Credit (EITC), Child Tax Credit (CTC), capital gains brackets, qualified business income deduction (199A), and the annual exclusion for gifts.
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