If you’re looking for an update on stimulus check number 2, there’s good news and bad news. The bad news is that there might not be a second round of IRS stimulus checks, per say. However, the good news is that lawmakers could make it up to you by offering attractive tax cuts that are just as good, if not better than, a second round of stimulus checks.
Update: instead of stimulus check 2
In an opinion piece for Fox Business, Rep. Jim Banks outlined five things he would like to see the Senate include in its phase 4 stimulus package. This update on stimulus check 2 suggests a number of tax cuts that could end up being even better than a second round of checks.
Two of the taxes that may be of most interest to taxpayers are the self-employment tax and payroll tax. Banks proposes ending the self-employment tax because it would enable small businesses to hire more workers. He said now it is more important than ever to create more jobs, and small business owners would be able to do it if they didn't have to pay the self-employment tax.
The other tax he wants to get rid of is the payroll tax, although it would be a temporary suspension. This would help all workers, whether they are self-employed or working for someone else. It also incentivizes people to get back to work after having received more on unemployment than what they received on the job. Banks argues that suspending the payroll tax is a better option than a second round of IRS stimulus checks because people have to be earning a paycheck to benefit.
Other possible provisions in the phase 4 stimulus package
The Republican representative also suggests making the tax cuts enacted two years ago permanent. He said taxpayers shouldn't have to worry about a tax increase in the middle of a recession and a pandemic.
Banks also suggested ending the death tax, noting that families who have lost a loved one from COVID-19 don't have to experience extra punishment by having to pay the death tax. He said eliminating the tax will remove a significant financial burden from families who are grieving.
Banks also called on Congress to "empower President Trump to unilaterally suspend burdensome regulations on businesses, charities, educational institutions and other employers. He noted that the Food and Drug Administration has utilized the Emergency Use Authorization to speed up the development of coronavirus drugs.
Banks added that because better treatments have been developed, the death rate for those infected with COVID-19 was down some 40% between March and April. He added that suspending regulations can work in other sectors as well. He said last year small businesses paid $1,500 per employee to comply with federal regulations. Lifting those regulations can enable them to hire more employees.
Could these provisions work better than stimulus check number 2?
Those who are looking for an update on whether there will be a stimulus check 2 are hoping for more money to be put in their pockets, but there is more than one way to do that. Banks cited a couple of examples that showed tax cuts such as the ones he suggested will do a good job at lifting the economy out of a recession.
He noted that in 2013, then-Governor Mike Pence enacted the biggest state tax cut in Indiana's history to drive the state out of the Great Recession. The tax cuts pushed the state's unemployment rate down to 3.5% by August 2017.
He also said that in the year and a half following the 2017 federal tax cuts, households saw their real disposable personal income rise by more than $5,200. GDP also climbed, while unemployment reached record lows. The Trump administration estimated last year that its deregulatory efforts will save households more than $3,000 annually.
Is a second round of IRS stimulus checks likely?
It remains to be seen whether a second round of IRS stimulus checks will make it into the phase 4 stimulus package. Banks' proposals read rather like a conservative wish list, while Republicans have criticized the House's HEROES Act as essentially a liberal wish list.
The reality will likely be somewhere in between these two lists. Democrats usually don't favor a lot of tax cuts or deregulation. As far as an update on stimulus check 2, it seems unlikely that there will be a second round if all these tax cuts are included. However, more checks wouldn't be needed if taxes are cut significantly.