Senate Republican leaders did not include a payroll tax holiday as one of their major priorities to be included in a COVID-19 relief package, after meeting with administration officials.
Senate Majority Leader Mitch McConnell, R-Ky., told reporters July 21 that opinions differ on providing a temporary payroll tax cut, but did not list it as a must-have item despite being urged to do so by President Trump. “We’re still in discussions with the administration on that,” McConnell said.
McConnell was addressing the media after meeting with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows. Mnuchin did not discuss with reporters whether the idea of a payroll tax holiday gained more support among Republicans, telling them only that he expects something to come together by the end of the week.
The administration’s push for payroll tax relief has found little support among lawmakers. Democrats have flatly rejected the idea, while several Senate Republicans said it wouldn’t help those who are unemployed. But some Republicans, like North Dakota Sen. Kevin Cramer, said not all programs are expected to help everyone. “PPP didn’t reach everyone,” he told reporters, referring to the Paycheck Protection Program.
McConnell said that Republicans would back another round of stimulus checks similar to those distributed by the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). The CARES Act provided those making less than $75,000 with $1,200 in relief, plus $500 for each child under 17.
McConnell's announcement did not sit well with Sen. Rand Paul, R-Ky., who called it “insane” to disregard the debt and pay individuals who haven’t lost their jobs. Although he won’t be able to stop the bill’s passage, he said he would do everything in his power to slow the process.
Democrats will likely welcome the idea of another round of relief checks, which they included in the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800), passed by the House almost two months ago.
McConnell said the new legislation would boost policies to provide incentives for businesses to hire and retain workers. That could lead to another overlap with the HEROES Act, which included a supercharged version of the employee retention tax credit. Senate Finance Committee ranking member Ron Wyden, D-Ore., who played an instrumental role in proposing the tax credit in the CARES Act, welcomed its expansion in the next package. “You’ll have to see whether Republicans want that,” he told Tax Notes.
McConnell made it clear that Republicans would like to achieve a consensus in their own caucus before negotiating with Democrats. Consensus could be made harder after he said he would not put any bill on the floor that lacks liability protection for businesses opening during the pandemic.
Other Proposals
The meeting with administration officials was also a time for lawmakers to pitch their own proposals to be included in the next coronavirus package.
Sen. John Cornyn, R-Texas, told Tax Notes he is confident that his Small Business Expense Protection Act (S. 3612) would make its way into the package. “We still have a few people that don’t like it, but I’m optimistic that as part of a larger package, we’ll get it done,” he said.
Cornyn’s bill would allow businesses that received loans through the PPP to deduct business expenses. It has 25 cosponsors, including Finance Committee Chair Chuck Grassley, R-Iowa, and Wyden. The measure was included in the HEROES Act and has the support of House Ways and Means Committee Chair Richard E. Neal, D-Mass.
Senate Majority Whip and Finance Committee member John Thune, R-S.D., used the opportunity to advocate for the Remote and Mobile Worker Relief Act of 2020 (S. 3995) to help workers who volunteered in other states during the pandemic avoid hefty tax bills from those states. The measure has the support of Finance Committee member Sherrod Brown, D-Ohio, but is likely to be opposed by New York lawmakers.
Correction, July 23, 2020: The CARES Act provided payments per child of $500.