House Dems mulling fourth COVID-19 package

Tax Hot Topics newsletter Democrats in the House of Representatives have begun discussing proposals for a potential fourth round of stimulus and relief to address the COVID-19 pandemic.

House Speaker Nancy Pelosi (D-Calif.) outlined several priorities with tax implications last week, including retroactively rolling back the $10,000 cap on the state and local tax deduction, expanding the recently enacted sick pay and paid family leave requirements to larger employers and investing in infrastructure.

Congress approved a $2 trillion stimulus package in late March. The Senate took the lead on the bill, so House Democrats didn’t have as much influence over the final product as they had hoped. For more details on the stimulus package, see “Lawmakers agree on historic stimulus bill.”

House Democrats are looking to take more control over the process but are unlikely to get everything on their wish list. Many of the proposed provisions are long-time priorities, such as a full or even partial repeal of the cap on the state and local tax deduction, that Republicans may be unlikely to consider as stimulus.

Other ideas under consideration include additional direct payments to individuals, free treatment for COVID-19 patients and increased funding for state and local governments, hospitals and nursing homes. House Democrats have also previously proposed expanding the Earned Income Tax Credit, making the child tax credit fully refundable, providing a more generous employee retention credit and creating new payroll tax credits for hospitals.

There may be significant bipartisan support for further stimulus depending on the extent of economic challenges. Some Republicans have also begun discussing future stimulus and President Donald Trump has discussed removing the 50% cap on deducting meals and entertainment as a way to help the restaurant industry.

The timing for additional legislation is uncertain. Congress is in recess until April 20, barring a significant deterioration of the current situation, and any urgency to act will likely depend on the public health and economic response warranted as the pandemic plays out.

Dustin Stamper
Managing Director
Washington National Tax Office
T +1 202 861 4144

Omair Taher
Senior Associate
Washington National Tax Office
T +1 202 861 4143

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