US Treasury considers tax filing extension to ease virus impact
The US Treasury is considering postponing the April 15 tax filing deadline to help reduce the economic pain from the coronavirus outbreak, as the Trump administration seeks bipartisan support for a stimulus package to bolster the economy.
“We think we can provide over $200bn of liquidity into the economy by delaying certain tax payments,” Steven Mnuchin, the US Treasury secretary, said in a hearing in the House of Representatives on Wednesday.
A senior US official said that pushing back the tax filing deadline was one of several options under consideration, but cautioned that a final decision had not been taken. Postponing the deadline would temporarily ease cash flow and liquidity crunches for individuals and companies at a time of growing uncertainty about the outbreak’s broader economic impact.
President Donald Trump and his economic team, including Mr Mnuchin, held talks with lawmakers on Capitol Hill on Tuesday to help determine what kind of stimulus measures would generate enough support to pass.
The Trump administration is trying to convince lawmakers to support a cut in payroll taxes until the end of the year — a controversial proposal amid the president’s re-election campaign.
But congressional Democrats have slammed the proposal, and even Republicans have been lukewarm, suggesting it was garnering limited traction. Instead, the White House may have to settle with a less sweeping package of measures initially, returning to Congress at a later stage to propose broad tax cuts as stimulus.
“This will require multiple times coming to Congress,” Mr Mnuchin said. He added that providing loan guarantees to industries that were hardest hit by the coronavirus outbreak and aid to small businesses would be the immediate goals.
Mr Mnuchin on Tuesday met Ms Pelosi to discuss a possible compromise. House Democrats planned to release their own legislation on Wednesday, with a vote set for Thursday, on measures that would provide paid leave to people forced to stop working, a boost to unemployment insurance and guarantees that people can get tested for free for coronavirus.
One Republican senator said it was unlikely that a compromise could be reached before lawmakers head home to their districts and states next week. While the Democrats want to ease the economic impact, they are more focused on efforts to help the most vulnerable. They are also worried about giving Mr Trump a win that would help re-elect him in November.
Senate Democrats unveiled their own package of measures, similar to those expected by members of their party in the House, on Wednesday. Chuck Schumer, the top Senate Democrat, cast blame on the Trump administration for not doing enough to combat the crisis early enough, and portrayed the White House’s proposed relief measures as corporate bailouts designed to help the president’s friends.
“We believe the help should be aimed at people not at corporations . . . We don’t think [the administration] should just throw money out of an aeroplane and hope it lands on some of the people who have been affected,” Mr Schumer said.
Efforts to formulate measures to ease the economic impact of the coronavirus outbreak come as the number of infected people in the US grows rapidly — and is expected to accelerate in the coming days as production of testing kits is increased and more Americans are tested. According to data compiled by Johns Hopkins University, 1,050 people in the US have tested positive for coronavirus and 29 have died.
Members of the White House coronavirus task force have stressed that while the risk to most Americans remains low, the number of cases is expected to increase as more testing is conducted.
The administration has come under criticism for early problems with distributing sufficient numbers of test kits. Officials have said that 4m kits will have been distributed by the end of this week.
“We will see more cases and things will get worse than they are right now,” Anthony Fauci, the head of the US National Institute of Allergy and Infectious Diseases, told the House oversight committee on Wednesday.
The Treasury’s move to delay tax filings was first reported by the Wall Street Journal, and attracted some scepticism even from conservative economists.
Doug Holtz-Eakin, a former top White House budget official who runs the American Action Forum think-tank, said it was doubtful that postponing the tax deadline would have a sustained impact on the economy.
“I don’t really get it. Nobody’s tax liability gets changed,” Mr Holtz-Eakin said. “I am not a fan of one-offs. This is going to be a sustained headwind and they ought to have a sustained response . . . Is this another attempt at instilling confidence with a relatively superficial move or do they genuinely believe it will work?”
Additional reporting by Aime Williams in Washington
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