Government officials are deliberating on ways to help Americans ride out the financial recession caused by the coronavirus pandemic. One such way is offering another round of stimulus checks. In the first round, those eligible for financial assistance received a $1,200 direct deposit. However, for the second round, some lawmakers propose giving a $4,000 tax credit to Americans traveling within the United States.
Government officials refer to the proposed tax credit as the Explore America Tax Credit. President Trump voiced support for the idea back in mid-May. He spoke of such a proposal’s benefits during a roundtable discussion with restaurant executives, according to Forbes.
At this time, it remains unclear whether Congress will approve another round of stimulus checks or tax credits. Also, many have questions about the specifics of how the travel credit would work.
The U.S. Travel Association proposed a plan towards the end of last month. In the document, they offer ideas on implementing a travel credit. “To reduce the time it takes to get to full recovery, Congress should create a new tax credit to encourage domestic business and leisure travelers to travel within a specified time frame, similar to what was done through the homebuyer tax credit in the wake of the housing crisis,” the document reads.
The proposal includes giving Americans half-off on some travel expenses. “Specifically, create a tax credit worth 50 percent of qualified travel expenses incurred in the U.S. between the date of enactment and December 31, 2021, up to a maximum tax credit of $4,000 per household,” the document reads. “Qualified travel expenses should include any expense over $50 that is incurred while traveling away from home in the U.S., with explicit reference to the expense of meals, lodging, recreation, transportation, amusement or entertainment, business meetings or events, and gasoline.”
Criticisms of the Explore America Tax Credit
The Explore America Tax Credit aims to provide assistance, but the proposal has its pitfalls. Firstly, the bill may not help Americans struggling the most. Only those with the means to travel benefit from a travel credit.
With unemployment at record highs, a tax credit incentivizing people to travel and spend money may not be the most beneficial way to help those in financial need. In the midst of a recession, a majority of people are looking to reduce spending. Therefore, a travel credit may not be an ideal solution.
Secondly, travel credits don’t provide immediate help. The first round of stimulus checks put money directly into Americans’ pockets. However, a travel credit would take a considerable amount of time to help those in need.
As of now, the HEROES Act is the only bill regarding stimulus checks to gain steam. It passed in the House of Representatives, but will not be considered in the Senate until July. Learn more here.