Republicans' New Coronavirus Relief Package Contains a Surprise Tax Break
Millions of Americans have been struggling financially since COVID-19 took hold in the U.S., pushing the economy deep into a recession. In March, the CARES Act was signed into law, and it did a number of key things to help provide relief to those negatively impacted by the pandemic. Namely, it provided direct stimulus checks and boosted unemployment benefits by $600 a week.
But the consensus has been that Americans need additional relief beyond what the CARES Act provided for, and so lawmakers have been busy trying to come up with a second proposal. On Monday, Republicans revealed their new stimulus deal, known as the HEALS (Health, Economic, Assistance, Liability Protection, and Schools) Act, and its more notable provisions include providing a second $1,200 stimulus payment to eligible Americans and boosting weekly unemployment benefits, albeit not at the same $600 rate jobless folks have been privy to these past few months. But buried inside the HEALS Act is another provision that could help struggling businesses survive the pandemic while also putting more money into business owners' pockets.
A tax break in the making
Dining establishments have been hammered by the COVID-19 outbreak, and as of July 10, more than 15,700 had already permanently closed their doors. As such, the HEALS Act is looking to allow business owners to fully deduct the cost of business meals on their taxes in an effort to encourage more people to support restaurants when they need it the most.
Right now, business-related meals are eligible for a 50% tax deduction -- meaning, business owners can write off 50% of their meal costs. By increasing that deduction to 100%, the hope is that restaurant revenue will rise so that these business can avoid closures, and also, so that some of the millions of food service employees who have lost their jobs during the pandemic will perhaps get rehired.
Right now, in some parts of the country, restaurants are limited to outdoor seating only. In other parts, indoor dining is permissible at very limited capacity. The result? Even restaurants that are "busy" may be losing money as they struggle to pay their overhead costs while only seeing a fraction of the business they're used to. By pumping money into these establishments, the hope is also that more can avoid permanent closures.
In addition to providing a better tax break for business meals, the HEALS Act is also seeking to roll out a second round of Paycheck Protection Program loans. During the first round, any business with up to 500 employees could apply for a forgivable loan provided it was experiencing economic uncertainty due to the pandemic. This second round, however, will only be applicable to businesses with 300 employees or fewer, and those that can prove that they've seen at least a 50% decline in revenue. Seeing as how a lot of restaurants have taken a beating, there's a good chance that if the HEALS Act is passed, dining establishments will have no problem qualifying for a second, much-needed PPP round.
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