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Report: $15 minimum wage bill would benefit 20.7 million workers

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Trump Wants Payroll Tax Cut, What That Means For You

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Trump Wants Payroll Tax Cut, What That Means For You

The next stimulus bill proposal is expected to be released as early as this week. With this, one of the major battleground items in the bill will be a payroll tax cut.

As we mentioned on Friday, National Economic Council chief Larry Kudlow wants a payroll tax cut included to help spur economic growth. Kudlow views the tax cut as a wage subsidy the government would give to employers. These employers would, in turn, pass it on to their employees.

Treasury Secretary Steve Mnuchin would rather send another stimulus check. He believes that the Democrat-led House would never approve a payroll tax.

Yesterday, President Trump raised the stakes by saying that he would consider not signing the next stimulus bill if it doesn’t include a payroll tax cut.

“I want to see it,” Trump said during an interview with Fox News. “I’ll have to see but, yeah, I would consider not signing it if we don’t have a payroll tax cut, yes.”

So what is a payroll tax cut, and how would it benefit the average American?

What Is A Payroll Tax Cut

For working Americans, 7.65% of your earnings are subtracted from each paycheck to help pay for Social Security and Medicare (6.2% goes to Social Security; 1.45% goes to Medicare). Your employer also pays an equal amount of taxes.

The Social Security tax is only collected on the first $137,700 of earnings; however, if you earn more than $200,000 per year, an additional 0.9% Medicare tax is collected on wages over $200,000.

What hasn’t been determined yet is if President Trump is insisting on a 100% tax cut or a smaller percentage. Let’s assume it’s a 100% payroll tax cut. For someone making $25 per hour and working a standard 40 hour work week, the savings would be $76.50 per week. This goes for a little more than $300 per month.

It’s also unclear how long the tax cut would last. In previous comments, President Trump mentioned extending the tax cut through November or possibly the remainder of the year.

The goal of the tax cut would be to allow workers to keep more of their wages in each paycheck. This would give them more money to spend and help boost the economy. Critics say that the money wouldn’t get into the economy quickly enough with a tax cut. Instead, like Treasury Secretary Mnuchin, they prefer to send out stimulus checks that are available for immediate spending.

Reservations

The other knock against a payroll tax cut is that it does nothing for those who aren’t collecting a paycheck, i.e. the tens of millions of unemployed Americans.

There is also concern about diverting money – at least temporarily – away from the chronically under-funded Social Security and Medicare programs. While the thought is to simply close the funding hole at a later date, there’s no framework in place to ensure that will occur.

We should know additional details of the plan this week when the proposal is released and we hear more from President Trump.

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Next Stimulus Bill Pits Dems vs. Republicans vs. Republicans

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Next Stimulus Bill Pits Dems vs. Republicans vs. Republicans

The next coronavirus stimulus bill is looking like it will pit Democrats against Republicans against Republicans.

House Speaker Nancy Pelosi said yesterday that the next stimulus bill to help the country battle back against the coronavirus will cost at least $1.3 trillion. She also says this is not enough.

“They (Republicans) know there’s going to be a bill. … First it was going to be no bill. And then it was going to be some little bill. Now it’s $1.3 [trillion]. That’s not enough,” she told reporters yesterday.

Both parties are at odds over a number of key topics that each side wants to include in the next bill. They are also up against a looming deadline. The lawmakers leave Washington at the beginning of August and won’t return until after Labor Day.

Senate Majority Leader Mitch McConnell said the Senate expects to reveal its plan next week. He added: “kids in school, jobs and health care are likely to be the focus of the bill.”

Enhanced Unemployment Benefits

Most pressing for the Dems is the extension of the enhanced unemployment benefits that expire at the end of the month. Both McConnell and President Trump’s economic advisors have shown little interest in extending the benefits. They rightfully point out that it allowed people to make more money at home than they did while working at their jobs.

President Trump has said on a handful of occasions that instead of enhanced unemployment benefits. However, he wants to implement a “going back to work” bonus for those that rejoin the workforce. It remains unknown if the Senate plan will include any re-employment bonus or any other unemployment relief.

Republicans have thus far ignored the Democrats’ request that renters and homeowners get additional financial assistance. Pelosi called this “very urgent” as the foreclosure and eviction moratoriums come to an end.

Dems are still hoping to funnel money to poorly-managed state and local governments to paper over their financial mismanagement. Republicans have refused to send aid. They stated that pandemic relief shouldn’t be used to bail out the states for pre-pandemic mistakes.

McConnell has said any new stimulus bill will include liability protections for doctors and businesses that reopen. Democrats have opposed the idea. However, Pelosi said she would like to see how a protection plan would be structured.

A Rift Among Republicans

The Republicans are busy keeping the Dems from creating a nation of highly-paid couch potatoes. On the other hand, there’s a growing divide between two of President Trump’s top lieutenants.

National Economic Council chief Larry Kudlow wants the next stimulus bill to include a payroll tax cut. He wants to add this to spur economic growth. Kudlow has long advocated for the elimination of the payroll tax, and in turn, use those savings as a wage subsidy the government would give to employers who would in turn pass it on to their employees.

Treasury Secretary Steve Mnuchin prefers to send another stimulus check. He believes that the Democrat-held House would never approve a payroll tax cut. Mnuchin has reportedly said that he has to focus on a policy that Pelosi will agree to for the bill to ultimately pass and get funded.

According to a GOP lobbyist, “Kudlow looks at Mnuchin as a Wall Street type who hasn’t fought the good fight over tax cuts as he has since the Reagan years. Mnuchin thinks Larry is being unrealistic because there’s no way Nancy Pelosi will pass a tax cut and give the president that type of victory before November.”

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Biden Is Latest Dem to Support Ridiculous Free Housing Proposal

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Biden Is Latest Dem to Support Ridiculous Free Housing Proposal

Presidential candidate Joe Biden is the latest Democrat to throw their support behind the ridiculous idea that housing should be free

During an appearance yesterday, Biden said he agrees with “forgiving” both mortgage and rent payments. He says this as the country struggles with the coronavirus pandemic and 38 million Americans are without a job.

“There should be rent forgiveness and there should be mortgage forgiveness now in the middle of this crisis. Not paid later, forgiveness. It’s critically important to people who are in the lower-income strata.” said Biden

Tara Raghuveer, housing campaign director at People’s Action, a political network devoted to grassroots organizing, aired her opinion. She said, “The tenant is the most vulnerable person in the economy right now.”

She added, “The alternative to not canceling the rent is complete bottoming out of the market. And tens of millions of people literally never financially recovering from this moment.”

Calls for Housing Relief

Biden’s call for rent and mortgage relief echoes efforts by Minnesota Rep. Ilhan Omar. Omar introduced legislation that would bar landlords and lenders from collecting monthly payments. It would also impose late fees “through the duration of the pandemic.”

Under Omar’s plan, renters and mortgage borrowers who skip payments wouldn’t need to pay back anything once the rent and mortgage forgiveness policy ended. And any lender or landlord who violated the plan would face penalties.

Correctly, housing industry experts point out that allowing renters to skip payments also needs to consider the consequences of the landlords not being able to pay their own mortgages on the property.

“If multifamily landlords, particularly the small mom and pop landlords who own just maybe one to four units can’t make their mortgage payments and can’t stay in business, those are affordable units that are going to be lost to the private market,” said Flora Arabo, the national senior director of state and local policy at Enterprise Community Partners.

“Rent forgiveness without rental subsidies could be pretty catastrophic for tenants,” Arabo said.

Omar’s plan addresses these concerns, supporters say. It does so because it creates a fund for landlords and lenders so that they could recoup any losses.

Not surprisingly, Raghuveer’s organization, People’s Action, worked with Omar in drafting the bill. The organization threw in more stipulations for landlords to collect those funds. These include providing information on their revenues, refraining from discrimination based on the source of income, and other tenant protections.

Biden’s Impact

Biden’s support for the rent and mortgage forgiveness plans doesn’t really mean much. However, the biggest problem with these free housing proposals is that they demonize landlords. They let the tenants immediately skip payments, but force the landlords to deal with bureaucracy and red tape to receive relief funds.

According to the Census Bureau, individual investors own nearly 75% of our nation’s rental units, not massive corporations. Those mom and pop landlords likely aren’t any more sophisticated than their tenants. They would also find themselves in the same dire financial situation should they lose the ability to collect rent.

Bob Pinnegar, president and CEO of the National Apartment Association, said in a recent interview, “Rent cancellation proposals do not adequately address the problem and fail to recognize that many property owners are in the same dire situation as their residents — substantial loss of income amid ongoing financial obligations.”

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