{ "id": "IN11270", "type": "CRS Insight", "typeId": "INSIGHTS", "number": "IN11270", "active": true, "source": "EveryCRSReport.com", "versions": [ { "source": "EveryCRSReport.com", "id": 621400, "date": "2020-03-26", "retrieved": "2020-04-01T22:11:21.370200", "title": "COVID-19 and Direct Payments to Individuals: Estimated Impact of Recovery Rebates in H.R. 748 on Family Incomes", "summary": "H.R. 748 (CARES Act), as passed by the Senate on March 25, 2020, includes many provisions designed to provide emergency relief to the economy in response to the effects of the COVID-19 pandemic. One such provision of H.R. 748 is the \u201c2020 recovery rebate,\u201d a direct payment made to individuals. Similar \u201crecovery rebates\u201d were sent to individuals in response to the 2001 and 2008 recessions. Several Members of Congress have recently proposed varying forms of direct payment, and two earlier versions of the CARES Act (S. 3548 and a draft circulated on March 22, 2020) also included a direct payment proposal. The direct payment in H.R. 748 is structured similarly to the 2008 recovery rebates. The rebate takes the form of an advance refundable tax credit, and would rely on the tax system to pay the credit to eligible individuals. As such, this Insight refers to eligible individuals as \u201ctaxpayers.\u201d\nIn general, taxpayers would be eligible for a rebate of $1,200 ($2,400 if the taxpayer is a married couple filing jointly). Taxpayers could increase the amount they receive by $500 for each child that they could claim for the child tax credit. The rebate amount would gradually phase out for higher-income taxpayers. H.R. 748 includes other provisions related to the timing of rebate payments, the information used to determine the rebate amount, and administrative challenges related to paying the rebate.\nHow much would family incomes increase due to the direct payment proposed in H.R. 748?\nPolicymakers may consider the extent to which a direct payment could increase family income. To estimate the potential impact of the 2020 recovery rebates, CRS calculated the amount that families would receive under the proposal in H.R. 748. CRS then compared the estimated rebate a family would receive to their estimated monthly income. Table 1 presents families\u2019 median estimated monthly income and the median percentage of monthly income that families would receive as a rebate. These estimates are broken down by the ratio of family income to the poverty threshold to show the impacts of the 2020 rebate across the income distribution.\nTable 1 estimates that the median family living in poverty would receive a rebate that amounts to 182% of the amount of the family\u2019s monthly income. The median refers to the midpoint of the distribution\u201450% of families in poverty would receive a rebate that is less than 182% of their estimated monthly income, while 50% of families in poverty would receive a rebate that is greater than 182%. The median family living near poverty (100%-199%) would receive a rebate equal to 92% of their estimated monthly income.\nTable 1. Estimated median percentage of monthly income families would receive as a 2020 recovery rebate under H.R. 748 (as passed by the Senate)\nRatio of family income to povertyMedian estimated monthly income (before rebate)Median percentage of estimated monthly income families would receive as a rebate\nLess than 100% (below poverty)$850182%\n100%-199%$2,10092%\n200%-299%$3,57056%\n300%-399%$4,93041%\n400%-499%\n$6,240\n31%\n\n500% or greater\n$10,440\n4%\n\nTotal\n$3,600\n57%\n\nSource: CRS calculations via the TRIM3 microsimulation model using 2016 data. \nNotes: Median estimated monthly income rounded to the nearest ten. Estimated monthly income was calculated by dividing families\u2019 annual income by 12. Income reported in this analysis reflects the Supplemental Poverty Measure (SPM) definition of income, and includes a family\u2019s after-tax wage income, self-employment income, the value of refundable tax credits, Social Security, Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), assisted housing benefits, childcare subsidies, and more. SPM poverty thresholds were used to calculate the ratios of family income to poverty.\nPolicymakers may also consider the extent to which the phaseout provision of the recovery rebates would limit benefits received by higher-income families. H.R. 748 phases out the rebate paid to a taxpayer by 5% of the taxpayer\u2019s adjusted gross income (AGI) that exceeds $75,000 ($112,500 for taxpayers filing as a head of household and $150,000 for married taxpayers filing jointly). Table 2 illustrates how the phaseout would affect rebate amounts for taxpayers in different parts of the income distribution. Specifically, taxpayers are categorized as (1) receiving a rebate that is not impacted by the phaseout, (2) receiving a rebate that is partially reduced by the phaseout, or (3) not receiving a rebate, as the rebate amount is fully reduced to $0. The estimates in Table 2 show that 82% of families would not be impacted by the phaseout and would receive the full rebate. Almost no families with incomes below 300% of poverty would have their rebate partially or fully reduced by the phaseout.\nTable 2. Estimated phaseout status of families eligible for a 2020 recovery rebate under H.R. 748 (as passed by the Senate)\nRatio of family income to povertyPercentage of all familiesFamily is not impacted by phaseoutFamily receives partial credit due to phaseoutFamily receives no credit due to phaseout\n\nLess than 100% (below poverty)\n15%\n100%\n0%\n0%\n\n100%-199%\n27%\n100%\n0%\n0%\n\n200%-299%\n19%\n98%\n2%\n0%\n\n300%-399%\n14%\n87%\n12%\n1%\n\n400%-499%\n8%\n65%\n29%\n6%\n\n500% or greater\n16%\n24%\n31%\n46%\n\nTotal\n100%\n82%\n10%\n8%\n\nSource: CRS calculations via the TRIM3 microsimulation model using 2016 data.\nNotes: Totals may not sum due to rounding. SPM poverty thresholds and the SPM definition of income were used to calculate the ratios of family income to poverty.\nAssumptions and limitations\nThese estimates should be considered with a number of assumptions and limitations in mind. These include \nThis analysis is based on the current tax code. It uses income data from 2016, the most recent year for which data are available for use in the TRIM3 model.\nThis analysis estimates monthly income using an annual measure and does not reflect potential month-to-month fluctuations in family income.\nThis analysis does not estimate decreases in income that families may experience as a result of COVID-19.\nThis analysis does not account for the proposed increase in unemployment insurance in H.R. 748.\nThis analysis assumes that every eligible family would receive exactly the recovery rebate amount to which it is entitled. This analysis does not account for taxpayers who are not required to file an income tax return\u2014it assumes that all eligible taxpayers will file, despite differences in tax filing rates based on age and receipt of public assistance.\nThis weighting used in Table 2 does not take family size into account. As a result, large families are underrepresented in the analysis presented in Table 2.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/IN11270", "sha1": "04aa8783a8e48dd31756711766603497145c5299", "filename": "files/20200326_IN11270_04aa8783a8e48dd31756711766603497145c5299.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/IN11270", "sha1": "c8645abfe382c67b4eee52d571ea5f5638dce3ec", "filename": "files/20200326_IN11270_c8645abfe382c67b4eee52d571ea5f5638dce3ec.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4797, "name": "Cash Assistance" }, { "source": "IBCList", "id": 4799, "name": "Individual Tax" } ] }, { "source": "EveryCRSReport.com", "id": 620875, "date": "2020-03-25", "retrieved": "2020-03-25T22:17:35.584498", "title": "COVID-19 and Direct Payments to Individuals: Estimated Impact of Recovery Rebates in the March 22 CARES Act on Family Incomes", "summary": "A draft of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, circulated on Sunday, March 22, 2020, includes many provisions designed to stimulate the economy in response to the effects of the COVID-19 pandemic. One such provision of the March 22 draft is the \u201c2020 recovery rebate,\u201d a direct payment made to individuals. Similar \u201crecovery rebates\u201d were sent to individuals in response to the 2001 and 2008 recessions. Several Members of Congress have recently proposed varying forms of direct payment, and an earlier version of the CARES Act (introduced as S. 3548) includes a direct payment proposal. The direct payment proposed in the March 22 draft is structured similarly to the 2008 recovery rebates. The rebate takes the form of an advance refundable tax credit and would rely on the tax system to pay the credit to eligible individuals. As such, this Insight refers to eligible individuals as \u201ctaxpayers.\u201d\nIn general, taxpayers would be eligible for a rebate of $1,200 ($2,400 if the taxpayer is a married couple filing jointly). Taxpayers could increase the amount they receive by $500 for each child that they could claim for the child tax credit. The rebate amount would gradually phase out for higher-income taxpayers. The March 22 draft includes other provisions related to the timing of rebate payments, the information used to determine the rebate amount, and administrative challenges related to paying the rebate.\nHow Much Would Family Incomes Increase Due to the March 22 CARES Act Proposed Direct Payment?\nPolicymakers may consider the extent to which a direct payment could increase family income. To estimate the potential impact of the 2020 recovery rebates, CRS calculated the amount families would receive under the proposal in the March 22 CARES Act. CRS then compared the estimated rebate a family would receive to their estimated monthly income. Table 1 presents families\u2019 median estimated monthly income and the median percentage of monthly income that families would receive as a rebate. These estimates are broken down by the ratio of family income to the poverty threshold to show the impacts of the 2020 rebate across the income distribution.\nTable 1 estimates that the median family living in poverty would receive a rebate that amounts to 182% of the amount of the family\u2019s monthly income. The median refers to the midpoint of the distribution\u201450% of families in poverty would receive a rebate that is less than 182% of their estimated monthly income, and 50% of families in poverty would receive a rebate that is greater than 182%. The median family living near poverty (100%-199%) would receive a rebate equal to 92% of their estimated monthly income.\nTable 1. Estimated Median % of Monthly Income Families Would Receive as a 2020 Recovery Rebate Under the March 22 CARES Act\nRatio of family income to poverty\nMedian estimated monthly income (before rebate)\nMedian percentage of estimated monthly income families would receive as a rebate\n\nLess than 100% (below poverty)\n$850\n182%\n\n100%-199%\n$2,100\n92%\n\n200%-299%\n$3,570\n56%\n\n300%-399%\n$4,930\n41%\n\n400%-499%\n$6,240\n31%\n\n500% or greater\n$10,440\n4%\n\nTotal\n$3,600\n57%\n\nSource: CRS calculations via the TRIM3 microsimulation model using 2016 data. \nNotes: Median estimated monthly income rounded to the nearest 10. Estimated monthly income was calculated by dividing families\u2019 annual income by 12. Income reported in this analysis reflects the Supplemental Poverty Measure (SPM) definition of income and includes a family\u2019s after-tax wage income, self-employment income, the value of refundable tax credits, Social Security, Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), assisted housing benefits, childcare subsidies, and more. SPM poverty thresholds were used to calculate the ratios of family income to poverty.\nPolicymakers may also consider the extent to which the phaseout provision of the recovery rebates would limit benefits received by higher-income families. The March 22 draft phases out the rebate paid to a taxpayer by 5% of the taxpayer\u2019s adjusted gross income (AGI) that exceeds $75,000 ($112,500 for taxpayers filing as a head of household and $150,000 for married taxpayers filing jointly). Table 2 illustrates how the phaseout would affect rebate amounts for taxpayers in different parts of the income distribution. Specifically, taxpayers are categorized as (1) receiving a rebate that is not impacted by the phaseout, (2) receiving a rebate that is partially reduced by the phaseout, or (3) not receiving a rebate, as the rebate amount is fully reduced to $0. The estimates in Table 2 show that 82% of families would not be impacted by the phaseout and would receive the full rebate. Almost no families with incomes below 300% of poverty would have their rebate partially or fully reduced by the phaseout.\nTable 2. Estimated Phaseout Status of Families Eligible for a 2020 Recovery Rebate Under the March 22 CARES Act\nRatio of family \nincome to poverty\nPercentage of all families\nFamily is not impacted by phaseout\nFamily receives partial credit due to phaseout\nFamily receives no credit due to phaseout\n\nLess than 100% (below poverty)\n15%\n100%\n0%\n0%\n\n100%-199%\n27%\n100%\n0%\n0%\n\n200%-299%\n19%\n98%\n2%\n0%\n\n300%-399%\n14%\n87%\n12%\n1%\n\n400%-499%\n8%\n65%\n29%\n6%\n\n500% or greater\n16%\n24%\n31%\n46%\n\nTotal\n100%\n82%\n10%\n8%\n\nSource: CRS calculations via the TRIM3 microsimulation model using 2016 data.\nNotes: Totals may not sum due to rounding. Supplemental Poverty Measure (SPM) poverty thresholds and the SPM definition of income were used to calculate the ratios of family income to poverty.\nAssumptions and limitations\nThese estimates should be considered with a number of assumptions and limitations in mind, including the following: \nThis analysis is based on the current tax code. It uses income data from 2016, the most recent year for which data are available for use in the TRIM3 model.\nThis analysis estimates monthly income using an annual measure and does not reflect potential month-to-month fluctuations in family income.\nThis analysis does not estimate decreases in income that families may experience as a result of COVID-19.\nThis analysis assumes that every eligible family would receive exactly the recovery rebate amount to which it is entitled. This analysis does not account for taxpayers who are not required to file an income tax return\u2014it assumes that all eligible taxpayers will file, despite differences in tax filing rates based on age and receipt of public assistance.\nThe weighting used in Table 2 does not take family size into account. As a result, large families are underrepresented in the analysis presented in Table 2.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/IN11270", "sha1": "5fb08f66a2f8c368995a109ae2c13671bd5249e1", "filename": "files/20200325_IN11270_5fb08f66a2f8c368995a109ae2c13671bd5249e1.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/IN11270", "sha1": "07dd876395879a88b6b490cb3bdc684211d86c24", "filename": "files/20200325_IN11270_07dd876395879a88b6b490cb3bdc684211d86c24.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4797, "name": "Cash Assistance" }, { "source": "IBCList", "id": 4799, "name": "Individual Tax" } ] }, { "source": "EveryCRSReport.com", "id": 620724, "date": "2020-03-24", "retrieved": "2020-03-24T22:09:11.944127", "title": "COVID-19 and Direct Payments to Individuals: Estimated Impact of Recovery Rebates in the March 22 CARES Act on Family Incomes", "summary": "A draft of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, circulated on Sunday, March 22, 2020, includes many provisions designed to stimulate the economy in response to the effects of the COVID-19 pandemic. One such provision of the March 22 draft is the \u201c2020 recovery rebate,\u201d a direct payment made to individuals. Similar \u201crecovery rebates\u201d were sent to individuals in response to the 2001 and 2008 recessions. Several Members of Congress have recently proposed varying forms of direct payment, and an earlier version of the CARES Act (introduced as S. 3548) includes a direct payment proposal. The direct payment proposed in the March 22 draft is structured similarly to the 2008 recovery rebates. The rebate takes the form of an advance refundable tax credit and would rely on the tax system to pay the credit to eligible individuals. As such, this Insight refers to eligible individuals as \u201ctaxpayers.\u201d\nIn general, taxpayers would be eligible for a rebate of $1,200 ($2,400 if the taxpayer is a married couple filing jointly). Taxpayers could increase the amount they receive by $500 for each child that they could claim for the child tax credit. The rebate amount would gradually phase out for higher-income taxpayers. The March 22 draft includes other provisions related to the timing of rebate payments, the information used to determine the rebate amount, and administrative challenges related to paying the rebate.\nHow Much Would Family Incomes Increase Due to the March 22 CARES Act Proposed Direct Payment?\nPolicymakers may consider the extent to which a direct payment could increase family income. To estimate the potential impact of the 2020 recovery rebates, CRS calculated the amount families would receive under the proposal in the March 22 CARES Act. CRS then compared the estimated rebate a family would receive to their estimated monthly income. Table 1 presents families\u2019 median estimated monthly income and the median percentage of monthly income that families would receive as a rebate. These estimates are broken down by the ratio of family income to the poverty threshold to show the impacts of the 2020 rebate across the income distribution.\nTable 1 estimates that the median family living in poverty would receive a rebate that amounts to 182% of the amount of the family\u2019s monthly income. The median refers to the midpoint of the distribution\u201450% of families in poverty would receive a rebate that is less than 182% of their estimated monthly income, and 50% of families in poverty would receive a rebate that is greater than 182%. The median family living near poverty (100%-199%) would receive a rebate equal to 92% of their estimated monthly income.\nTable 1. Estimated Median % of Monthly Income Families Would Receive as a 2020 Recovery Rebate Under the March 22 CARES Act\nRatio of family income to poverty\nMedian estimated monthly income (before rebate)\nMedian percentage of estimated monthly income families would receive as a rebate\n\nLess than 100% (below poverty)\n$850\n182%\n\n100%-199%\n$2,100\n92%\n\n200%-299%\n$3,570\n56%\n\n300%-399%\n$4,930\n41%\n\n400%-499%\n$6,240\n31%\n\n500% or greater\n$10,440\n4%\n\nTotal\n$3,600\n57%\n\nSource: CRS calculations via the TRIM3 microsimulation model using 2016 data. \nNotes: Median estimated monthly income rounded to the nearest 10. Estimated monthly income was calculated by dividing families\u2019 annual income by 12. Income reported in this analysis reflects the Supplemental Poverty Measure (SPM) definition of income and includes a family\u2019s after-tax wage income, self-employment income, the value of refundable tax credits, Social Security, Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), assisted housing benefits, childcare subsidies, and more. SPM poverty thresholds were used to calculate the ratios of family income to poverty.\nPolicymakers may also consider the extent to which the phaseout provision of the recovery rebates would limit benefits received by higher-income families. The March 22 draft phases out the rebate paid to a taxpayer by 5% of the taxpayer\u2019s adjusted gross income (AGI) that exceeds $75,000 ($112,500 for taxpayers filing as a head of household and $150,000 for married taxpayers filing jointly). Table 2 illustrates how the phaseout would affect rebate amounts for taxpayers in different parts of the income distribution. Specifically, taxpayers are categorized as (1) receiving a rebate that is not impacted by the phaseout, (2) receiving a rebate that is partially reduced by the phaseout, or (3) not receiving a rebate, as the rebate amount is fully reduced to $0. The estimates in Table 2 show that 82% of families would not be impacted by the phaseout and would receive the full rebate. Almost no families with incomes below 300% of poverty would have their rebate partially or fully reduced by the phaseout.\nTable 2. Estimated Phaseout Status of Families Eligible for a 2020 Recovery Rebate Under the March 22 CARES Act\nRatio of family income to poverty\nPercentage of all families\nFamily is not impacted by phaseout\nFamily receives partial credit due to phaseout\nFamily receives no credit due to phaseout\n\nLess than 100% (below poverty)\n15%\n100%\n0%\n0%\n\n100%-199%\n27%\n100%\n0%\n0%\n\n200%-299%\n19%\n98%\n2%\n0%\n\n300%-399%\n14%\n87%\n12%\n1%\n\n400%-499%\n8%\n65%\n29%\n6%\n\n500% or greater\n16%\n24%\n31%\n46%\n\nTotal\n100%\n82%\n10%\n8%\n\nSource: CRS calculations via the TRIM3 microsimulation model using 2016 data.\nNotes: Totals may not sum due to rounding. Supplemental Poverty Measure (SPM) poverty thresholds and the SPM definition of income were used to calculate the ratios of family income to poverty.\nAssumptions and limitations\nThese estimates should be considered with a number of assumptions and limitations in mind, including the following: \nThis analysis is based on the current tax code. It uses income data from 2016, the most recent year for which data are available for use in the TRIM3 model.\nThis analysis estimates monthly income using an annual measure and does not reflect potential month-to-month fluctuations in family income.\nThis analysis does not estimate decreases in income that families may experience as a result of COVID-19.\nThis analysis assumes that every eligible family would receive exactly the recovery rebate amount to which it is entitled. This analysis does not account for taxpayers who are not required to file an income tax return\u2014it assumes that all eligible taxpayers will file, despite differences in tax filing rates based on age and receipt of public assistance.\nThe weighting used in Table 2 does not take family size into account. As a result, large families are underrepresented in the analysis presented in Table 2.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/IN11270", "sha1": "1203cf5fc2b4aad936fa92029f6c1d96fb3d3544", "filename": "files/20200324_IN11270_1203cf5fc2b4aad936fa92029f6c1d96fb3d3544.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/IN11270", "sha1": "ea79c34947bf27f4e58fbce368a5f104da48212c", "filename": "files/20200324_IN11270_ea79c34947bf27f4e58fbce368a5f104da48212c.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4797, "name": "Cash Assistance" }, { "source": "IBCList", "id": 4799, "name": "Individual Tax" } ] } ], "topics": [ "CRS Insights" ] }