'Explore America': Authorities Offer US Residents Large Travel Tax Credit

The US economy has again begun to show some signs of life. Employment rates are rising, and businesses across the country are starting to reopen, but unfortunately the fight against COVID-19 is not over yet, recalls MoneyTalksNews.

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The coronavirus pandemic caused one of the most severe economic downturns since the Great Depression. No matter what positive results can already be observed at the initial stage of recovery, experts say that there is still a long way to go.

Lawmakers are considering additional forms of aid to Americans to generally stimulate the economy. One of the proposals being discussed is the Explore America tax credit.

What is this loan and how will it work

Explore America tax credit was mentioned in President Donald Trump’s remarks at a roundtable of restaurant industry executives in May and has been approved by the Independent Restaurant Coalition and the United States Travel Association.

This proposal would allow Americans to get a tax credit of up to $ 4000 for travel within the country, which could help accelerate the recovery of the US tourism industry.

Tax credits will allow individuals to qualify for loans of up to 50% of their expenses with US airlines, car rental companies, theme parks, hotels and restaurants in 2020 and 2021.

However, there are many details that still need to be clarified.

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Will a travel incentive plan be approved

The Explore America Act would encourage consumers to support U.S. restaurants, airlines and hotels—all businesses hit hardest by COVID-19.

According to estimates by the American Tourism Association, people will spend 40% less in the US travel industry due to the pandemic crisis. Given these overwhelming data, it is not surprising that the tourism councils welcomed this proposal.

“The travel industry supported jobs for 1 in every 10 Americans before the pandemic, and measures to stimulate travel will not only make people more grateful that we live in this great country, but will also be an effective and efficient way to help restore jobs in everyone. corner of the country,” said a May 19 press release issued by the U.S. Travel Association.

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Will a tax credit motivate people to travel

Although this decision is likely to provide much-needed assistance to tourism workers, the question remains: will a tax credit be sufficient to motivate people to travel with current health and safety risks?

"It's too far-fetched," said Francine Lipman, a law professor at the University of Nevada, Las Vegas, and a former accountant. “This will affect people who are going to spend this money anyway, so the goal (of stimulating the economy) will not be achieved.”

“If someone isn't traveling because they're afraid of getting infected, I can't imagine a tax credit will eliminate that fear,” says Kirk Kinder, CFO and president of Picket Fence Financial in Palm Harbor, Florida. “In my opinion, it will not be possible to motivate those who do not travel due to financial consequences (loss of job, reduction in hours, etc.) because they will only have to file this amount for a tax refund by the time they file their return in 2021.”

In contrast, Morris Armstrong, a licensed registered agent (EA), is confident that the innovation would provide a direct contribution to the economy.

“People who were not financially affected received financial assistance, and many even received unemployment benefits on top of their regular wages. Those payments may end up in banks or markets rather than in the economy, Armstrong says. “The idea of ​​a travel subsidy ensures that the money is spent to achieve some benefit. It is a transfer of money from a consumer to a seller, be it an airline, car rental, hotel or restaurant. In my opinion, this is viable and not much different from an energy credit. You reward the consumer for acting in the best interests of the economy.”

However, will this be enough to help Americans in a troubled financial situation, or will it help mainly those who would go on a trip anyway?

“If you're not working or worried about losing your job along with a possible second wave of COVID-19 in the late fall and winter, you simply won't travel,” explains David Evangelista, a CPA who specializes in taxes and accounting in New York. “The credit will be realized only after filing a tax return in 2021 or 2022.”

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