The Internal Revenue Service (IRS) has begun processing the third round of stimulus. The first batch will be sent by direct deposit.
In the coming weeks, payments will be sent via debit cards, credit cards, and mail. In total, the IRS expects 158.5 million American households to benefit from the program. According to the relief package, every American can get up to $1,400 in payments depending on their economic situation.
Individuals making up to $75,000 or couples with $150,000 in annual income will get the full $1,400 in payment. People earning higher incomes will only receive partial benefits. Dependents are also eligible to receive payments, unlike previous rounds of the stimulus.
A family of five, for example, can receive up to $7,000. College students will also receive payments, which was not possible in the previous two rounds of the stimulus.
If a person has not filed 2020 tax returns, the IRS will use bank information from the 2019 tax returns. If an individual’s job has changed since the pandemic, the IRS will adjust the payments’ size once he or she files the 2020 tax returns.
If the person has already filed the 2020 tax returns, the IRS will automatically make such adjustments. The decision to handle payments this way was to speed up the payments to eligible taxpayers.
However, the stimulus appears to face a major issue. A coalition of banking and consumer groups has asked U.S. Treasury Secretary Janet Yellen to fix a loophole that allows pandemic payments directed to American families to be taken by debt collectors.
The two previous stimulus rounds had explicitly prohibited such seizures. However, the current rescue plan does not feature such protections. The coalition includes groups like the Consumer Federation of America, the American Bankers Association, and the Credit Union National Association.
“The economic impact payments are intended to help families purchase food and other necessities to make ends meet. Many people were already struggling prior to the coronavirus crisis, and millions have now been laid off or had their hours cut.”
“Allowing economic impact payments to be garnished could impose significant burdens on some families, especially those in communities of color, facing unprecedented circumstances,” the coalition letter stated.
‘Build Back Better’
The Biden administration plans to follow the $1.9 trillion pandemic package with a massive infrastructure plan called ‘Build Back Better.’ It aims to spend $4 trillion over a ten-year period on improving America’s infrastructure and key industries like renewable energy, semiconductors, and electric vehicles.
However, the proposal has been met with disapproval from numerous Republican and Democrat lawmakers concerned that the debt will hurt the U.S. One suggestion put forward is to fund the infrastructure projects with higher taxes.
Democrat Elizabeth Warren has proposed a two percent tax on people who have a net worth above $50 million. The move is expected to generate at least $3 trillion in funds that can be used to fund the Biden administration’s plan.
“A #WealthTax is critical for raising revenue, and that revenue is critical for raising opportunity. We build a future for all of our kids by investing in opportunity. This is one way we can make this government work for everyone – not just the rich and powerful,” Warren tweeted.