Although the US economy has suffered from COVID-19, the travel industry has been hit hard. But a new proposal could serve the dual purpose of breathing new life into the tourism industry while putting money back in Americans’ pockets. It’s called the Explore America Tax Credit, and its purpose is to encourage domestic tourism while financially rewarding Americans for going out and traveling to the United States.
How Tax Credits Work
A tax credit is a dollar-for-dollar reduction in a person’s tax payable. A $ 1,000 tax credit, in other words, means that person pays $ 1,000 less to the IRS.
The proposed Explore America tax credit would allow Americans to claim up to 50% of their domestic travel expenses as a tax credit on a future tax return, up to a total credit value of $ 4,000 . These costs could include things like plane or train tickets, accommodation, recreation, meals and entertainment. Additionally, the Explore America tax credit, in its current form, would last until the end of 2021.
Is the Explore America Tax Credit a Good Solution?
Currently, millions of Americans are suffering financially from COVID-19 and are desperate for a second round of stimulus funds after the first $ 1,200 payments made under the CARES Law. Although Democrats have proposed a follow-up follow-up Under the HEROES Act, Republican lawmakers have made it clear that he has little chance of passing a vote in the Senate.
The Explore America tax credit could therefore serve as an alternative to a follow-on stimulus payment by putting money directly into Americans’ pockets and potentially helping the economy out of its way. recession. Credit would also serve another key objective: job creation. If Americans are more inspired to travel, it could reintroduce countless jobs that have disappeared in the past three months.
But despite all of this, the Explore America Tax Credit may not be as attractive as a real follow-up stimulus check. On the one hand, it’s a credit, which means Americans should file a tax return and wait for it. Given the number of people in difficulty at present, It is not a good thing.
Thus, people who have difficulty putting food on the table will not benefit from a tax credit that forces them to spend money that they do not have to make while traveling. And let’s not forget the additional implications of increased travel at this time. Sure, it could help a hard-hit industry speed up recovery, but should we really be encouraging Americans to get on planes at a time when the COVID-19 threat is still very much present? In the past week or two alone, significant spikes in cases have been recorded in various parts of the country, and if this trend continues, lockdown measures could be implemented again to not only limit travel, but roll back the whole economy.
As such, while a $ 4,000 travel tax credit can be of great benefit to the wealthy nationwide – or even to regular wage earners who have not been affected by the ongoing crisis – this is hardly a solution for those who have been struggling since March. Ideally, lawmakers will recognize this and take action to ensure that if the Explore America tax credit passes, it does not replace an additional stimulus that so many people desperately need.