'Explore America': Authorities Offer US Residents Large Travel Tax Credit
The US economy has again begun to show some signs of life. Employment rates are rising, and businesses across the country are starting to reopen, but unfortunately the fight against COVID-19 is not over yet, recalls MoneyTalksNews.
The coronavirus pandemic caused one of the most severe economic downturns since the Great Depression. No matter what positive results can already be observed at the initial stage of recovery, experts say that there is still a long way to go.
Lawmakers are considering additional forms of assistance to Americans to boost the economy overall. One of the proposals under discussion is the Explore America Tax Credit.
What is this loan and how will it work
Explore America tax credit was mentioned in President Donald Trump’s remarks at a roundtable of restaurant industry executives in May and has been approved by the Independent Restaurant Coalition and the United States Travel Association.
This proposal would allow Americans to get a tax credit of up to $ 4000 for travel within the country, which could help accelerate the recovery of the US tourism industry.
Tax credits will allow individuals to qualify for loans of up to 50% of their expenses with US airlines, car rental companies, theme parks, hotels and restaurants in 2020 and 2021.
However, there are many details that still need to be clarified.
Will a travel incentive plan be approved
The Explore America Bill aims to incentivize consumers to support restaurants, airlines and hotels in the United States - all businesses that have been hit hardest by COVID-19.
According to estimates by the American Tourism Association, people will spend 40% less in the US travel industry due to the pandemic crisis. Given these overwhelming data, it is not surprising that the tourism councils welcomed this proposal.
“The travel industry supported jobs for 1 in every 10 Americans before the pandemic, and the travel incentive measures will not only add appreciation to the people that we live in this great country, but will also be an effective and efficient way to help restore jobs in everyone. corner of the country, ”said a May 19 press release issued by the US Travel Association.
On the subject: Airport Security Check: 7 New Rules for Air Travelers
Will a tax credit motivate people to travel
Although this decision is likely to provide much-needed assistance to tourism workers, the question remains: will a tax credit be sufficient to motivate people to travel with current health and safety risks?
“This is a too detached proposal,” says Francine Lipman, a law professor at the University of Nevada at Las Vegas and a former accountant. "It will affect people who are going to spend this money anyway, so the goal will not be achieved (stimulating the economy)."
“If someone is not traveling for fear of infection, I cannot imagine that a tax credit would eliminate that fear,” said Kirk Kinder, chief financial officer and president of Picket Fence Financial in Palm Harbor, Florida. "In my opinion, it will not be possible to motivate those who do not travel due to financial consequences (loss of work, reduction of hours, etc.), because they will have to submit this amount for a tax refund only by the time of filing a declaration in 2021."
In contrast, Morris Armstrong, a licensed registered agent (EA), is confident that the innovation would provide a direct contribution to the economy.
“People who were not financially affected received material assistance, and many even received unemployment benefits in excess of their regular wages. These payments may end up in banks or markets, not in the economy, says Armstrong. - The idea of a subsidy related to travel ensures that the money is spent for some benefit. It is the transfer of money from consumer to seller, whether it be an airline, car rental, hotel or restaurant. In my opinion, this is viable and not much different from an energy loan. You reward the consumer for doing what is in the interests of the economy. ”
However, will this be enough to help Americans in a troubled financial situation, or will it help mainly those who would go on a trip anyway?
“If you’re unemployed or worried about losing your job, along with a possible second wave of COVID-19 in late fall and winter, you simply won’t travel,” explains David Evangelista, an accountant specializing in taxes and accounting in New York. "The loan will be sold only after filing a tax return in 2021 or 2022."
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