As unemployment rises and the first wave of federal economic relief nears expiration, lawmakers are increasingly looking to expand an existing wage subsidy to keep workers on payrolls and help businesses stay afloat, the Wall Street Journal reported. The $3 trillion package passed by the House this month features an expanded wage subsidy, known as the employee retention tax credit. That proposal, which would add about $194 billion to a $55 billion tax credit created in March, is gaining bipartisan support even as lawmakers clash over other legislation to aid the economy during the pandemic. For Democrats, the subsidy offers an alternative to the payroll-tax cut President Trump is seeking, which they oppose because it does little for the unemployed. Republican supporters prefer the subsidy to spending programs favored by Democrats and see it as a way to link aid to work. The House plan would give employers enough money to cover up to 80 percent of their wages and benefits, up to $45,000 per worker, plus a credit for fixed expenses like rent. Eligible companies would simply keep taxes withheld from employees’ paychecks. If that isn’t enough to equal the credit, they could get additional money from the Internal Revenue Service. Smaller businesses would get the subsidy for all workers, while larger ones would get it only for furloughed workers still receiving wages or benefits. The break would be scaled to each employer’s revenue loss during the coronavirus pandemic. Read more. (Subscription required.)
https://www.wsj.com/articles/tax-credit-for-keeping-workers-on-payrolls…
In related news, the first shoots of an economic recovery from shutdowns caused by the coronavirus pandemic are starting to emerge, but the U.S. is likely to face a sustained period of record-high unemployment, the Wall Street Journal reported. Policy makers confronting that possibility are preparing plans to offer additional stimulus to the economy in the coming weeks and months. White House economic adviser Kevin Hassett said on Sunday that he already sees signs a rebound is occurring, pointing to businesses reopening and credit-card data showing consumers are starting to increase spending. Still, he said that May’s unemployment rate, which measures joblessness in the middle of the month, could “end up with a number north of 20%.” April’s rate, 14.7 percent, was the highest on record back to 1948. The Trump administration is in talks with Congress on a fourth pandemic-relief bill, Hassett said. He demurred when asked if President Trump supports extending a $600 weekly boost to unemployment benefits past July. House Democrats have proposed extending those enhanced benefits into early next year. Read more. (Subscription required.)
https://www.wsj.com/articles/unemployment-could-top-20-but-economy-reco…
