United States President Donald Trump on Friday, March 27, 2020 signed into law a significant $2 trillion stimulus package, the largest economic aid in US history, in response to the financial impacts of COVID-19.
The stimulus is a significant financial injection into the US economy aimed at enabling workers, small businesses and industries to deal with the financial disruption caused by the virus through direct financial assistance in form of checks with the amount received based on income.
Key Provisions of the Stimulus
- Direct payments of $1,200 will be given to every individual who earns $75,000 in adjusted gross income or less, with married couples earning up to $150,000 to receive $2,400 and an additional $500 per each child. The payment would scale down by income
- Singles will get a total of $99,000 while couples without children will get $198,000
- Congress will spend about $250bn for checks up to $1,200 per person that will go directly to taxpayers.
- In addition, the bill would provide billions of dollars in aid to hard-hit hospitals struggling to deal with the outbreak as well for state and local governments that are cash-strapped due to their response to coronavirus.
Who is eligible? According to the Tax Foundation, a DC-based think tank, an estimated 93.6% of Americans will be eligible for a check coming from the stimulus package.
- To be qualified for the full amount, a person’s most recently filed tax return must show that they made $75,000 or under.
- For persons who make more than $75,000, the amount will go down incrementally by $5 for every $100 increase in salary. If a person makes above $99,000, or a couple makes above $198,000, no check will be given.
Stimulus Support for Small Business The Small Business Administration, under the stimulus package, will oversee the Paycheck Protection Program, which will distribute $350 billion to small businesses that can be partially forgiven if the companies meet certain requirements. The loans will be available to companies with 500 or fewer employees.
- According to policy experts, the stimulus will support American small businesses in the following ways:
- A $350 billion pardonable loan program designed to ensure that small businesses do not lay off employees
- A 50% refundable payroll tax credit on worker wages will further incentivize businesses, including ones with fewer than 500 employees, to retain workers
- Looser net operating loss-reduction rules that will allow businesses to offset more
- A delay in employer-side payroll taxes for Social Security until 2021 and 2022
- Sole proprietors and other self-employed workers could be eligible for the expanded unemployment-insurance benefits the bill provides
- A portion of the $425 billion in funds appropriated for the Federal Reserve’s credit facilities will target small businesses
When will the stimulus be checked out? Treasury Secretary Steven Mnuchin said the White House wants the checks out in two weeks, a statement that experts have refuted saying that the logistics of sending them may take time until May, given how long it takes the Internal Revenue Service (IRS) to send out checks.
This is not the first time the US government has sent checks to Americans. The federal government gave up to $300 in 2001 and $600 in 2008 to taxpayers who met a certain income bracket to similarly stimulate the economy.