Senate Majority Leader Mitch McConnell on Thursday released a massive stimulus plan to prop up consumers, companies and local governments bending under the economic consequences of the world-wide coronavirus pandemic.
A centerpiece of the package is tax rebates to individuals of $1,200 and $2,400 for married couples. Rebates are completely phased out for taxpayers with incomes exceeding $99,000 for individuals or $198,000 for a couple.
The legislation also provides $208 billion worth of loans for businesses suffering due to the coronavirus pandemic, including $58 billion for the airline sector and $150 billion for other distressed areas of the economy.
The money comes with some strings attached, however, including a cap on salaries for executives at companies that get the money and a requirement that air service to certain destinations not be interrupted. It also caps severance pay for executives making more than $425,000 to twice their 2019 pay.
McConnell said he would immediately engage in discussion with Democrats, whose votes will be needed in both the Senate and House to pass the legislation and get it to President Donald Trump for his signature.
“These are urgent discussions,” McConnell said. “The Senate is not going anywhere until we take action.”
The plan would affect a wide swath of the economy.
It includes Sen. Susan Collins’ plan to provide $300 billion for businesses with up to 500 employees to help them make payroll and other expenses retroactive to March 1.
Those businesses would get up to $10 million each to cover their payroll and other expenses, with the amount capped by their expenses in the previous year.
Provided businesses don’t lay off workers and meet other requirements, the loans would be forgiven by the government.
The airline industry, which is suffered a steep drop in revenue as traffic plummets, would receive a total of $58 billion in loans and loan guarantees under the proposal.
Passenger carriers would get $50 billion of that while another $8 billion would go to cargo haulers. The legislation would also suspend for the rest of the year a variety of taxes and fees collected on tickets, fuel and cargo.
The legislation would also delay the tax filing deadline to July 15 after the IRS already delayed the tax payment to that date. The deadline for business owners and self-employed individuals to pay their estimate quarterly taxes would be deferred until Oct. 15. The bill also delays corporate tax payments to Oct. 15.
As a way to provide liquidity to individuals, the legislation also waives penalties for pulling up to $100,000 from 401(k) and other retirement plans. Savers can repay those funds but aren’t required to do so.
The legislation also allows individuals who don’t don’t itemize their tax bills to deduct up to $300 in charitable donations on their tax returns.
Employers could delay paying up to 50% of the payroll taxes they owe until Jan. 1, 2021.
The bill also fixes a mistake in the 2017 tax law that had limited tax breaks to restaurants and retailers, two sectors that are likely to be hard hit as consumers stay home to prevent the spread of the virus. The legislation would allow them to write-off costs of renovating their stores in one year.
Corporations could also deduct more interest on the loans they owe and the changes would ease up some restrictions on using business losses to offset their tax bills.
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