The coronavirus financial rescue package the House will take up Friday would save U.S. households and businesses nearly $1 trillion in taxes this year, though companies would have to pay a chunk of that back starting in 2021.
The Joint Committee on Taxation estimates that overall during the next decade, the tax provisions of the massive relief bill will cost $591 billion. That’s roughly one-fourth of the overall $2.2 trillion preliminary cost White House officials have tallied up, though some independent projections are even pricier.
The biggest immediate savings from the package comes from a payroll tax holiday for employers, which will put off the need to pay $352 billion in Social Security taxes on wages and salaries until after this year.
The payback requirement is stiff: Half is due by the end of 2021 and the rest by the end of 2022, on top of payroll taxes they’d have to ordinarily have to pony up. That could create pressure on lawmakers to stretch out the repayments if the economy hasn’t fully recovered post-COVID-19. But as long as the IRS recoups the money within the 10-year budget window, the overall cost of the aid package comes down substantially.
The largest piece of the package that doesn’t need to be repaid are the measure’s centerpiece: tax rebates of up to $1,200 per person. Married couples filing jointly get up to $2,400, with an extra $500 per child. The benefit starts to phase out above $75,000 and $150,000 in adjusted gross income for individuals and joint filers respectively. Price tag: $292 billion, according to JCT.
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