US President Joe Biden makes remarks on International Women’s Day at the White House in Washington, March 8, 2021.
Tom Brenner | Reuters
President Joe Biden’s coronavirus plan will boost low-income households more than the tax bill signed by former President Donald Trump, an analysis has found.
The $ 1.9 trillion bill for pandemic relief passed by the Senate will increase after-tax income by about 20% on average for households earning $ 25,000 or less, or the lowest 20% of earners, according to estimates by the Tax Policy Center released Monday. The typical first year tax cut for those households under the 2017 Republican plan was 0.4%.
The two plans will have vastly different effects on the highest earners, the analysis shows. The average after-tax income for households earning more than $ 3.4 million, or the top 0.1%, would not increase under the coronavirus relief bill. It was up 2.7% under the GOP law.
All told, low- and middle-income households would receive more than two-thirds of the tax benefits from the Biden stimulus plan, versus just 17% under the Republican tax law.
The pandemic bill passed by the Senate is expected to pass through the House on Wednesday. Biden will sign it into law by the weekend.
Major economic aid provisions include $ 300 per week unemployment insurance, $ 1,400 direct payments to most Americans and their families, an extension of the child tax credit, and rental assistance. The Tax Policy Center based its estimates on policy measures, including the incentive checks and an increased child tax credit, payroll tax credit, and child tax credit and dependent care.
Under the bill, Americans who qualify for a $ 1,400 payment would receive the same amount for each dependent. The child discount is $ 3,600 for children under 6 years old and $ 3,000 for children between 6 and 17 years old for one year.
Because of that policy, low-income households with children would receive an average boost of about $ 7,700, or 35% of their after-tax income, according to the analysis.
Democrats have said the legislation will soften the pandemic’s economic damage and prevent future pain. They have also touted it as a means of reducing child poverty in the US
Republicans argue that a recovering economy won’t need nearly $ 2 trillion more in stimulus packages. They have said Democrats have been piling money into policies unrelated to the public health crisis.
The Tax Policy Center’s analysis notes that most of the benefits of the pandemic relief law will exceed a year, while the Republican tax changes would last eight years.
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