The outline of the COVID relief bill released by Senate Republicans today contains many provisions that have been supported by the National Taxpayers Union and analyzed by the National Taxpayers Union Foundation. Addressing the income tax status of remote workers, the status of the employee retention tax credit (ERTC), and the crisis’ effect on the solvency of mandatory spending programs are high priorities for American taxpayers everywhere. While the final bill has not yet been introduced, it is encouraging that Senate leadership has focused on the following important issues in its early draft:
Tax Certainty for Remote Workers. The Senate’s draft includes a key provision ensuring tax certainty for employees working in a different state than they normally do, either as a result of being required to work from home by public health guidelines or because they’ve traveled to volunteer their services in disaster response. NTUF highlighted this problem in several issue briefs earlier this year, noting the vital importance of a Congressional fix in light of widespread remote work extending well into 2021.
Expanded Relief for Small Businesses. The Senate’s draft expands the Employee Retention Tax Credit (ERTC) in several important ways. NTU has argued that ERTC expansion could help keep workers and employers linked during the worst of the pandemic and economic downturn. We wrote in June that Congress should increase the percentage of wages that the ERTC covers, increase the employer threshold, and improve the interaction between ERTC and the Paycheck Protection Program (PPP). The Senate draft accomplishes all of these aims and more.
Enhanced Fiscal Responsibility via Trust Fund Review. Senate Republicans included Sen. Mitt Romney’s (R-UT) TRUST Act in their legislative package. This critical legislation, which NTU endorsed in October 2019, would require Congress to examine the state of America’s ailing trust funds, including the Social Security, Medicare, and Highway trust funds, and recommend reforms through bipartisan, bicameral “rescue committees.” At a time when Congress is spending record amounts of taxpayer dollars, this down payment on fiscal discipline is most welcome.
Unfortunately, the US MADE Act, originally introduced by Sen. Lindsey Graham (R-SC), is included in the package and would require the government to purchase domestic personal protective equipment (PPE) for the Strategic National Stockpile. This would unnecessarily inflate costs and invite our trading partners to adopt similar protectionist restrictions affecting billions of dollars of U.S. exports.
Taxpayers have a keen interest in ensuring that tax dollars are spent in a targeted and effective manner, and legislation of the size that Congress has passed recently requires a fine-toothed comb to search through every nook and cranny. Nonetheless, taxpayers should be encouraged that these provisions were included in the initial package from the Senate - we look forward to reviewing the entire package to evaluate its impact on taxpayers.