The second round of stimulus payment is still up in the air, but a $4,000 tax credit might take its place. The tourism industry had taken a massive blow after the coronavirus pandemic resulted in the closure of international travel.
What is the $4,000 tax credit?
Government officials have come up with a proposal named "Explore America" that would provide a tax credit that could jumpstart the travel industry. It would also reward tourists that travel to the United States by enabling households to receive up to 50% of the money they spend on vacations back up to a maximum of $4,000.
To understand, a tax credit is an amount of money that tax-paying individuals can use to deduct from the money they owe a country's inland revenue. It is most commonly used by officials to urge economic activities to circulate the funds.
According to English AS, the US Travel Association believes the credit should apply to any expenditure worth over $50, including "meals, lodging, recreation, transportation, amusement, or entertainment," and would remain in effect until 2021 ends.
President Donald Trump expressed his support for the credit system, announcing in a round table meeting at the White House that a travel tax credit that Americans could use when traveling domestically is a "big deal."
The US Travel Association welcomed Trump's support of the tax credit and noted that it would also assist in getting America back on its feet and move towards prosperity.
How would it help?
The idea was initially put out in May when Trump proposed the credit at the round table. One significant role the idea would play in helping the economy would be by reviving the travel, restaurant, and tourism sectors of the US economy, as reported by Forbes.
Another advantage the credit would provide is by encouraging eligible citizens to spend their money and boost the economy. Lastly, it would create more opportunities for the unemployed by supplying jobs in the sector.
One noticeable drawback is that the proposal is a tax credit and not a direct payment along with risking the rise of coronavirus infections due to the increase of traveling citizens. Another significant factor that would be taken into consideration for implementation would be the high cost it requires.
Trump's administration seems to be open to the idea of both a second stimulus check and a $4,000 travel tax credit. However, the possibilities go in favor of the tax credit as a second stimulus check grows increasingly unlikely.
Senate Majority Leader Mitch McConnell, along with senate republicans, does not support a second stimulus check due to its cost. There are other legislations prioritized that are planned to stimulate the economy.
The most significant focus of Trump's administration centers around job growth and getting people back into work. More specifically, they are focusing on manufacturing, jobs, infrastructure spending, payroll tax credit, return to work bonus, and several other incentives.
Treasure Secretary Steve Mnuchin, speaking at a Senate Committee on Small Business and Entrepreneurship hearing, said that they would be looking closely at a second stimulus check to distribute more funds that could go around and stimulate the economy.