Proposed $4,000 tax credit for travel

[Lurker]

How does that matter? $4000x300m is $1.2T.

You're assuming 300 million Americans have $8k to spend to get $4k back as a credit.

[cgr]

How does that matter? $4000x300m is $1.2T. That will move any market.

1) it's 4k per tax filing household. In 2017 there were 153MM personal returns filed, and many households file separately or have dependants filing separately, so it's not 300MM

2) Each household needs to actually spend the cash in order to get the tax credit at year end. I'm sure many households won't afford even 50% of a leisure trip these days.

[PlatinumGuy]

1) it's 4k per tax filing household. In 2017 there were 153MM personal returns filed, and many households file separately or have dependants filing separately, so it's not 300MM

2) Each household needs to actually spend the cash in order to get the tax credit at year end. I'm sure many households won't afford even 50% of a leisure trip these days.

A lot more people will file for free money. There will also be people who go on vacation to use the $4000 and spend more from their own pocket, though some would just replace their own spending with Federal money resulting in zero travel impact. I would assume the total economic impact would be around $500B. The biggest threat I see is that I doubt it will be safe to travel until at least mid 2021, so Trump has little incentive to push it through.

[avromie7]

A lot more people will file for free money. There will also be people who go on vacation to use the $4000 and spend more from their own pocket, though some would just replace their own spending with Federal money resulting in zero travel impact. I would assume the total economic impact would be around $500B. The biggest threat I see is that I doubt it will be safe to travel until at least mid 2021, so Trump has little incentive to push it through.

People will travel before mid 2021, but it's gonna be tough to get the government to incentivize it.

[Lurker]

A lot more people will file for free money. There will also be people who go on vacation to use the $4000 and spend more from their own pocket, though some would just replace their own spending with Federal money resulting in zero travel impact. I would assume the total economic impact would be around $500B. The biggest threat I see is that I doubt it will be safe to travel until at least mid 2021, so Trump has little incentive to push it through.

It's a 50% credit, so you need to put out double to get a credit on your tax return. If the average American takes advantage of this, the only winners will be the credit card companies.

[PlatinumGuy]

People will travel before mid 2021, but it's gonna be tough to get the government to incentivize it.

Not at the same levels as before Covid no matter how much government incentivizes it

It's a 50% credit, so you need to put out double to get a credit on your tax return. If the average American takes advantage of this, the only winners will be the credit card companies.

But, that's what America is good at

[yelped]

I really see this as a pointless tax credit. The people who will spend that kind of money to travel will do so anyways without the tax credit and just travel on our dime. The others won't have money to travel.

Smells like a major pork project.

[avromie7]

I really see this as a pointless tax credit. The people who will spend that kind of money to travel will do so anyways without the tax credit and just travel on our dime. The others won't have money to travel.

Smells like a major pork project.

I dont think that's necessarily true, your average person doesn't spend $8k on travel/vacation. While some of it they probably were going to spend, people will spend more because of it.

[Lurker]

I really see this as a pointless tax credit. The people who will spend that kind of money to travel will do so anyways without the tax credit and just travel on our dime. The others won't have money to travel.

Smells like a major pork project.

I think you're underestimating the US consumer. If there's a hint of a discount or deal, people will go into debt to jump all over it. It's why we have so many sales days in this country, and why our personal debt looks the way it does in the low-to-mid incomes brackets. People will put it on the credit card because "it's free money" and wait for the tax refund check to pay it off (or get comfortable with the payment and spend the refund check elsewhere).

[yelped]

I dont think that's necessarily true, your average person doesn't spend $8k on travel/vacation. While some of it they probably were going to spend, people will spend more because of it.

What I meant was that people who don't have the money to travel now won't, so the people who are benefiting from this don't need this to stimulate them to spend money on travel.

But maybe @Lurker is right.

[avromie7]

What I meant was that people who don't have the money to travel now won't, so the people who are benefiting from this don't need this to stimulate them to spend money on travel.

But maybe @Lurker is right.

https://www.creditdonkey.com/average-cost-vacation.html This was the first google result. Assuming it's true, for the average american family to spend $8k they need to spend an extra $3500, almost the entire amount of the proposed credit.

[Lurker]

https://www.creditdonkey.com/average-cost-vacation.html This was the first google result. Assuming it's true, for the average american family to spend $8k they need to spend an extra $3500, almost the entire amount of the proposed credit.

Look at the per family number, not the per person. Spending double is what Americans do best.

[avromie7]

Look at the per family number, not the per person. Spending double is what Americans do best.

The per family for a family of 4 is $4,580, if that family wanted to get the full $4k credit they would need to spend an extra $3420.

[Lurker]

The per family for a family of 4 is $4,580, if that family wanted to get the full $4k credit they would need to spend an extra $3420.

Sorry, I misread what you wrote to mean per person. Still, $3420 is really $1710 because half is coming back, and I think that's money people will spend in order to not miss out on the "free money."

[avromie7]

Sorry, I misread what you wrote to mean per person. Still, $3420 is really $1710 because half is coming back, and I think that's money people will spend in order to not miss out on the "free money."

It's still $3420 being spent on the travel sector that would otherwise not be spent.

[yesitsme]

https://www.forbes.com/sites/jimwang/2020/06/20/the-second-stimulus-check-will-not-be-a-4000-explore-america-tax-credit/

[cgr]

There's a new version, the TRIP Act (Tax Rebate and Incentive Program) floating around. Again, it's nowhere near becoming law as it will probably need to be packaged into a larger bill, and then passed in both the House and Senate before it goes to the President for a signature. It's in a more advanced stage than the Explore America Tax Credit previously mentioned because that hasn't been introduced as a bill yet, while this one has.

The changes to it are that it's 4k per adult (8k per couple) plus an additional $500 per dependant child. It's a 100% credit instead of only covering 50%, and there's no $50 minimum for eligible expenses.The minimum distance of 50 miles from residency stands, but this one also allows for a standard mileage deduction on top of gas expenses.

[Dan]

There's a new version, the TRIP Act (Tax Rebate and Incentive Program) floating around. Again, it's nowhere near becoming law as it will probably need to be packaged into a larger bill, and then passed in both the House and Senate before it goes to the President for a signature. It's in a more advanced stage than the Explore America Tax Credit previously mentioned because that hasn't been introduced as a bill yet, while this one has.

The changes to it are that it's 4k per adult (8k per couple) plus an additional $500 per dependant child. It's a 100% credit instead of only covering 50%, and there's no $50 minimum for eligible expenses.The minimum distance of 50 miles from residency stands, but this one also allows for a standard mileage deduction on top of gas expenses.

Insanity.

[cgr]

Insanity.

If I didn't have antibodies this would be a good discrimination case to take up. Those immune will have an easier time psychologically spending this than those worried about getting infected.

[Dan]

If I didn't have antibodies this would be a good discrimination case to take up. Those immune will have an easier time psychologically spending this than those worried about getting infected.

Don't tell that to @ExGingi