The CARES Act passed both chambers this week, making it the third measure passed this month to target the economic downturn and health crisis brought by the virus. (AP)
Enactment of the CARES Act comes as the number of confirmed coronavirus cases in the U.S. rose above 86,000 and nearly 3.3 million Americans filed unemployment claims in recent weeks. The bipartisan bill is the third measure passed this month to target the economic downturn and health care crisis brought on by the viral outbreak.
"This legislation is the product of two very different sides coming together to protect the health and financial security of all Americans in the face of an unprecedented crisis," House Ways and Means Committee Chairman Richard Neal, D-Mass., said during floor debate. "As we face this record economic challenge, families need benefits that will allow them to cover essential expenses like food, rent, and medications."
Rep. Kevin Brady, R-Texas, ranking member on the Ways and Means Committee, said businesses are facing a cash-flow problem from a lack of customers that will result in more layoffs and closures.
"Through temporary tax relief and lending, this bill injects cash directly into our local businesses, small and large, to stop this cash-flow crisis," Brady said. "We focus on preserving business to preserve jobs, to get them through these next weeks."
The nonpartisan congressional Joint Committee on Taxation came out Thursday with an estimate of the budget impact: about $591 billion over the next decade. The legislation will provide roughly $250 billion in rebate checks to most Americans, help struggling businesses meet payrolls and prop up state and local relief efforts. It also corrects errors in the 2017 federal tax overhaul .
Under the bill, the Internal Revenue Service will send $1,200 to individuals and $2,400 to couples filing joint tax returns. The payments will be reduced for those with incomes above $75,000, or $150,000 for couples, and they will be eliminated for those with incomes of more than $99,000, or $198,000 for couples.
The legislation provides a refundable payroll tax credit for 50% of employer wages for companies fully or partly prohibited from operating during the crisis. It also waives the 10% early withdrawal penalty for retirement fund distributions up to $100,000 made on or after Jan. 1, 2020, and before Dec. 31, 2020.
The bill limits corporate stock buybacks and executive pay for airlines that receive grants or loans from the federal government in order to stay afloat. It also fixes the so-called retail glitch by allowing retailers to immediately write off expenses related to physical improvements instead of depreciating them over 39 years.
The bill provides that businesses can carry back losses from 2018, 2019 and 2020 for up to five years. In addition, net operating losses temporarily will not be subject to a taxable income limit, meaning they can fully offset income.
--Additional reporting by Dylan Moroses, Andrew Kragie and Theresa Schliep. Editing by John Oudens.
Update: This story has been updated with the signing of the bill.
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