The U.S. Government is currently studying various forms of a second stimulus payment to American taxpayers which could come in the form of a tax credit for domestic travel expenditures.

Both the Trump administration as well as congress have been working on a variety of proposals ranging from another cash payment to different forms of tax credits.

A travel credit is geared towards helping to bolster the domestic economy and motivating Americans to vacation within the country rather than taking trips abroad which might be rather limited either way for the remainder of the year.

While some countries plan to open up to foreign tourists including U.S. citizens such policies might quickly be withdrawn if Covid-19 statistics show a flareup again and that will lead to many Americans traveling domestically this year.

The beauty of the U.S. is that the country is extremely big and offers a wide variety of leisure options without the need to actually cross the border, hence why most Americans don’t even have a valid passport.

As Forbes reported this proposal has been on the table for a week now and is just one of many options (including a second stimulus check in cash) floated by various political actors which include the President and his administration as well as lawmakers from both political parties.

If approved, the “Explore America” Tax Credit would dangle up to $4,000 in front of Americans for vacation expenses spent in the U.S. at hotels, theme parks, restaurants and other tourism-related businesses through the end of 2021. The credit would cover up to 50% of a household’s total vacation expenses, up to a maximum of four grand.

President Trump brought up the proposal last month in a White House roundtable with restaurant industry leaders, mentioning an “’Explore America’ tax credit that Americans can use for domestic travel, including visits to restaurants.”

Approval of such a tax credit would be a win for the U.S. tourism industry, which has been pummeled by the coronavirus crisis. Before the pandemic, the industry contributed $2.6 trillion to the economy, supported 15.8 million American jobs overall—8.9 million directly— and delivered a $69 billion trade surplus last year, according to the U.S. Travel Association. But travel businesses and employees were among the first and hardest hit during the crisis, representing nearly 40% of all job loss through April. …

While this sounds like a good proposal the question remains if the ‘Explore America’ option would really serve the needs of Americans in financial distress at this point.

 

The first stimulus check provided direct cash to the taxpayer, helping people provide for their family as in putting food on the table and pay their living expenses such as rent. The money is quickly running out though, after all how far do $1200 really go unless you have other benefits to draw from?

Based on the initial proposal such as the one quoted in the Forbes article, purpose and effect of the travel tax credit would be to revive the travel, restaurant and tourism industry in the domestic U.S. as it encourages eligible taxpayers to spend money on tourism and boost the economy.

There is however a big drawback. This won’t be a cash payment but a tax credit so if one were to utilize this then the way it works is to pay in advance and then declare it when filing taxes. That’s all nice and well but one gotta wonder if spending thousands on a vacation is really the kind of thing household who are really in need of financial support are prioritizing right now even IF they have the money to do so.

The cost for the federal government would be high in both instances, it will be another Trillion Dollar heavy package and I can’t imagine that it’s an “either or” situation as a vacation credit simply doesn’t suit the most distressed households who struggle to put food on the table (or even keep their table) in these times.

Conclusion

Whatever the solution will be it should be noted that many Americans will still go on vacation of some sort this year. Providing a financial boost to that industry would make sense as most likely the top vacation spots of the country would get a lot of relief from this scheme which in balance might avoid further bailouts with government money from other sources.

California, Las Vegas, Florida, National Parks, Hawaii and also Colorado (skiing) are popular vacation destinations under normal circumstances. Then again, what’s normal this year? I can’t see people enjoying a holiday with strict quarantine and protection orders so the more stringent the local government is, the more is the tourism sector going to suffer.

 

 

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