The federal government moved tax day from April 15 to July 15 in response to the coronavirus pandemic, granting more time for both filing and payment. But for many taxpayers, it might not matter much if states don’t follow suit.
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The U.S. Treasury Department has pushed the April 15 tax payment deadline to July 15. However, taxpayers still have to file their tax returns by the usual April 15 deadline.
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The Great Recession provides some insight into how tax revenues declined during a deep recession. Across OECD countries, revenues fell by 11 percent from 2008 to 2009 with corporate income taxes seeing the steepest decline at 28 percent. Revenues from individual income taxes fell by 16 percent.
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Joe Biden and Bernie Sanders have both released proposals to tax capital gains at ordinary income rates for the wealthiest Americans. As part of a broader platform to address income inequality, Biden and Sanders suggest increasing current capital gains rates on taxpayers with income over $1 million and $250,000, respectively.
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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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Taxes present one policy tool available to ease the impending liquidity crunch brought on by the coronavirus crisis, which policymakers are already pursuing by postponing the tax payment deadline and waiving interest and penalties.
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In the short term, states must anticipate reduced tax collections as the economy slows. And here, not all taxes are created equal. As a general rule, income taxes are more volatile than consumption taxes.
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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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While lawmakers are working through the design of vapor tax proposals, they must thread the needle between protecting adult smokers’ ability to switch and barring minors’ access to nicotine products. A good first step is creating appropriate definitions for the new nicotine products to avoid unintended disproportionate taxation based on design differences or bundling.
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