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Friday, January 27, 2023

Stimulus Checks To Arrive By Thanksgiving: 7 States In Line Span The Length And Breadth Of America

States across America from California in the west to New York in the east are sending out stimulus checks in the last quarter of 2022 and more are in the pipeline at the moment. At the moment residents of 7 states will receive inflation relief payments in various forms ranging from direct bank transfers to paper checks and debit cards sent through the US Postal Services.

Other states too are passing laws to enable them to send Stimulus Checks to residents who continue to be beset by rising prices ranging from the record price of gasoline to equally unprecedented spikes in the price of groceries, utilities, and rent.

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The federal administration on the other hand has stayed away from any input about fresh stimulus checks, what many had hopefully termed the fourth stimulus check.

The Economic Downturn Has Its Precursor In Past Stimulus Check Policies That Widened The Economic Gap

The economic downturn linked to the pandemic has its precursor in past republican policies that sought to widen the economic gap between the lower 50% of households and the superrich

The political wranglings in Washington affected not only the stimulus check payments but also put a stop to one of the most vital poverty-alleviating measures that were initially planned to continue through 2025.

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While the Republicans have been unabashedly for the super-rich, the multi-millionaires, and the billionaires, the Trump era saw this set pay less than the working class for the first time. Simple calculations reveal that the richest 400 families in the US paid an average tax rate of 23% while the bottom half of households unbelievably paid at a rate of around 24.2%.

The tax package pushed through by Donald Trump allowed the top 0.1% of Americans to earn a 2.5% tax cut that pushed this group’s tax rate below that of the lower 50% of households.

What had been billed as a middle-class miracle was a $1.5 trillion tax cut that has solely helped multi-millionaires and billionaires pay a lower rate of tax than the working class for the first time in American history.

The average effective tax rate in 2018 for the richest 400 families was 1.2% less, according to economists at the University of California. This trend started gradually in the 60s and was through supported by the Republicans during their ruling years. In 1960 this same group of people was paying a tax of 56% on their income which had fallen to 40% by 1980.

But even as the pandemic was spreading out into the world, Trump’s tax cuts were a tipping point and tilted the balance in favor of the billionaires. It was Trump’s greatest legislative triumph and he continues to advocate it to this day.

His controversial tax package helped the 0.1% of top earners in the US to obtain a tax cut of around 2.5% that brought their tax rate to below the tax rate of 50% of the lower end of American households.

Trump flaunted it as a revolutionary change and the disgraced former president sought to justify the unjustifiable by claiming that the working class was the biggest winner and would result in millions of more jobs and higher wages.

Neither of these two happened as evidenced by later economic growth. Wage growth and hiring instead witnessed a significant fall following the tax cut. And the national deficit swelled to $1 trillion in the meantime.

The dramatic fall in taxes for the super-wealthy was made possible thanks to skewered policies that cut the top rates of taxes on capital gains even as it allowed corporations to shelter profits overseas.

Political Wranglings And Republican Intransigence Put An End To A Novel Poverty Alleviating Measure

Political intransigence led to the end of one of the most novel poverty-alleviating measures undertaken by the federal administration in recent years.

While the Child Tax Credit stimulus check was not new, an element that was added to it made it one of the best, most convenient, and immediate measures that directly benefited millions affected by the economic downturn and pushed them into poverty and homelessness.

In March 2021 the passing of the American Rescue Plan Act saw the Child Tax Credit expanded for a year. payments jumped abruptly from $2,000 per year to between $3,000 and $3,600 for children of various age groups. Children below 6 years got more while children between 6 and 17 received $3,000 total.

Also, the CTC stimulus checks included children up to 17 years instead of 16 years previously.

Independent data has revealed that the US child poverty rate fell by half in 2021 from 9.7% in 2020 to 5.2% in 2021 largely due to the enhanced CTC stimulus checks. This happened despite only 50% of the amount being paid through monthly stimulus checks over 6 months between July and December 2021.

Another significant development was that the payments were made out as an advance for the first time, despite it being an amount to be adjusted against the 2021 income tax returns to be filed in the first quarter of 2022 or later by Americans.

And it was not only the regular filers who benefitted in this round. With the credit being transformed into a refundable tax, even people who did not have to pay income tax got a full refund of the CTC stimulus check.

The increased child tax credits provided low and moderate income with much-needed resources during the COVID-19 pandemic and its aftermath when the economic downturn gripped the nation.

These additional benefits are not measured in the Official Poverty Measures, something that experts note is a basic flaw in the system.

But there is concern that the drop in poverty seen in 2021 will only prove to be temporary as the tax credit enhancements were limited to the last two quarters of 2021, even though 50% of the amount was paid in 2022 after the 2021 income tax returns were filed by individuals and households.

The expanded CTC stimulus check caused a massive decline in child poverty. And now without the support of this cover, nearly a third of children will be forced back into poverty.

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