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In a press conference today, President Trump announced four actions he is taking to provide the American people Covid-19 relief. He said he is signing directives covering enhanced unemployment benefits, a payroll tax holiday, an eviction moratorium and student loan relief. He also said he is considering income tax reductions for middle and lower income earners and capital gains tax reductions to create more jobs.
Enhanced Unemployment Benefits
Mr. Trump announced a $400 weekly enhanced unemployment benefit. This is $200 less than the CARES Act and what House Democrats proposed in the HEROES Act, but $200 more than proposed by Senate Republicans in the HEALS Act. It’s also consistent with the offer extended to the Democrats during negotiations over a stimulus package.
He said that states will be asked to cover 25% of this cost using existing funding, such as funds available to states through the Coronavirus Relief Fund. The federal government will cover 75% of the cost.
Payroll Tax Holiday
Mr. Trump also signed an executive order for a payroll tax holiday for those earning less than about $100,000 a year. Specifically, he signed a directive instructing the Treasury Department to allow employers to defer a certain portion of payroll taxes from August 1st or September 1st, details to follow. As provided in the executive order, the payroll tax holiday applies to individuals who’s compensation “during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.”
Further, if he wins the election in November, he says he’ll forgive these taxes and make these tax cuts permanent. He also said he may extend the payroll tax holiday beyond the end of the year.
Eviction Moratorium
The President will also sign a directive instructing the Department of Housing and Urban Development to make sure renters and homeowners can stay in the homes. He did not provide details on how this eviction moratorium would be structured. He’s also directing HUD to provide financial assistants to struggling renters and homeowners, and work with landlords and lenders to implement this policy.
The executive order, among other things, instructs the Secretary of Health and Human Services and the CDC to consider whether an an eviction moratorium is reasonable necessary to prevent the further spread of Covid-19 from one state to another. It also directed the Treasury to identify funds that can be used for temporary assistance to renters and homeowners.
Student Loan Relief
He is also signing a directive to assist student loan borrowers. Specifically, he is extending the policy of 0% interest rates and suspended payments on most federal student loans through the end of the year (it currently expires at the end of September). He also said he would “most likely” extend this beyond the end of the year.
Income Tax and Capital Gains Tax Reductions
Acknowledging that tax inequality exists, he said he is looking at reducing income tax and capital gains tax. The income tax reduction will be for middle and lower income individuals. The capital gains tax reduction will be targeted to create jobs. He didn’t say how a capital gains tax cut would create jobs, particularly given that such tax reductions typically favor wealthier taxpayers.
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