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March 11, 2020 – The payroll tax cut proposed by the Trump administration is an ineffective way to address the COVID-19 pandemic and would primarily benefit well-off households, the Institute on Taxation and Economic Policy said today.
Payroll tax cuts
Steve Wamhoff, ITEP’s federal policy director, today published an analysis of how a 2 percentage-point payroll tax cut (the last time the nation cut the payroll tax, it was by 2 percentage points) would affect workers. It found that nearly half the benefits (48 percent) would go to the richest 20 percent of households. To view the complete analysis, visit: https://itep.org/trumps-proposed-payroll-tax-cut-is-not-the-right-answer/
Airline industry tax cuts
White House advisors and President Trump also have alluded to providing tax breaks to the airline industry, which has been affected by consumers significantly scaling back their travel. As a whole, the profitable industry has paid an average effective tax rate of 2.3 percent over the last two years, taking advantage of a tax break that allows companies to defer taxes. “There’s no reason to expect that cutting corporate taxes—whether for airliners or for companies more generally—would have a meaningful stimulating effect on the U.S. economy,” ITEP Senior Fellow Matthew Gardner wrote in a blog. Read the full blog for company-by-company tax data.
Tax Cuts Hamper Ability to Address Public Health Crises
ITEP Executive Director Amy Hanauer writes in a new blog, “Some problems can only be solved when public officials have the resources to act. Today’s public health crisis is that kind of problem. Unfortunately, the Trump administration’s deep tax cuts leave our health infrastructure knee-capped, just when we need it most. Assertive, smart policy changes can protect us from the worst consequences.” For more on how to address COVID-19 and the nation’s broader funding challenges, read the full blog.