Speaker of the House, Nancy Pelosi, shepherded passage of the HEROES Act through the House of … [+] Representatives. The bill’s tax provisions are estimated to cost $883 billion
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The first tally is in. The HEROES Act, passed the House of Representatives Friday evening, would reduce federal revenue by a net total of $883 billion between 2020 and 2030, according to the Joint Committee on Taxation (JCT). It is highly unlikely that the bill will get signed into law as is, given the White House’s veto threat and Senate Republican’s view of it as “hardly salvageable” and a “parade of absurdities.”
HEROES Act Cost Breakdown:
Here is a breakdown of the most expensive portions of the HEROES Act based on the report by the JCT. It is important to note that the JCT only focuses on parts of the bill that impact federal revenue; the Congressional Budget Office will provide a more comprehensive estimate of the bill’s total cost in the coming weeks.
- Second Stimulus Checks – $413 billion: The cost of a second round of direct stimulus payments to individuals would total $413 billion. This is significantly higher than the cost of the first round of checks sent to individuals, which the Congressional Budget Office estimated would cost $293 billion. The difference is due to the higher amount doled out to dependents by the HEROES ACT. Whereas the CARES Act disburses $500 for each qualifying dependents, the HEROES Act would provide $1,200 for each.
- Improvements to Employee Retention Tax Credit (ERTC) – $163 billion: According to the IRS, the ERTC “under the CARES Act encourages businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.” The HEROES Act would expand the ERTC by increasing the refundable payroll credit from 50 percent to 80 percent of qualifying wages and by increasing the wage cap from $10,000 to $15,000.
- Repeal of State and Local Taxes (SALT) Limitation – $136 billion: Repealing the 2017 Tax Cuts and Jobs Act provision that limited state and local tax deductions to $10,000 would lower federal tax revenue by $136 billion.
- Child Tax Credit (CTC) – $118 billion: Expanding the CTC, making it fully refundable, and increasing its value from $2,000 to $3,000 would cost taxpayers $118 billion through 2030. The HEROES Act would be advanced on a monthly basis to help families with children during the crisis.
- Private Insurance Provisions – $106 billion: The HEROES Act would provide COBRA subsidies to help Americans who lose their employer-provided health insurance. It would also create a special enrollment period in the Affordable Care Act exchanges for uninsured Americans to purchase insurance.
While many of the provisions in the HEROES Act lower revenue, some would actually increase it, most notably by repealing the ‘millionaire giveaway’ that Senate Republicans had introduced in the CARES Act. Reversing this tax windfall for the rich would raise an estimated $254 billion between 2020 and 2030.
The JCT estimate of $883 billion is only a subset of the total cost of the HEROES Act, focusing on parts that impact federal revenue. As a comparison, the JCT estimated that the tax provisions in the CARES Act would cost $556 billion. The Congressional Budget Office then forecast that it would increase federal deficits by roughly $1.7 trillion between 2020 and 2030. In the coming weeks, the Congressional Budget Office will release a more comprehensive forecast of the bill’s cost, which could top $3 trillion.
Further Coronavirus-Related Reading:
How Some Rich Americans Are Getting Stimulus ‘Checks’ Averaging $1.7 Million
Repeal The $1.6 Million Stimulus ‘Check’ Loophole For Rich Americans? Futile Proposal Unveiled
HEROES Act Passes House; Omits $2,000 Recurring Stimulus Checks And Other Notable Items
New Proposal Would Extend $600 Unemployment Benefit Indefinitely Until Coronavirus Crisis Ends
