Martha McSally: Let's give every taxpayer a $4,000 credit to go on vacation

Martha McSally: Let's give every taxpayer a $4,000 credit to go on vacation

Imagine you and your spouse being told you’re in line for a refund of up to eight grand from Uncle Sam at tax time — but only if you’ve spent that amount on travel. Not on groceries or rent or child care or any of the thousand other higher priorities one might reasonably have during a global pandemic and terrifying economic downturn.

You have to have spent the money doing something public-health experts actually advise against doing right now.

This bill is a spending blowout on top of an already historic spending blowout on top of the trillion-dollar deficits a Republican administration was running pre-pandemic, when the economy was growing explosively. And for what? Nothing grander than tourism.

How would Congress justify this giveaway once it eventually ends the beefed-up unemployment benefits that Americans have been relying on to get by amid the COVID-19 layoffs?

The American TRIP Act provides a $4,000 travel credit for individuals, and $8,000 for joint filers (plus an additional $500 credit for dependent children), for 2020, 2021, and 2022.

This credit applies to all travel within the United States and its territories, so long as the travel and expenses and final destination is 50 miles from the principal residence of the filer(s).

Qualified expenses for the credit include lodging, travel, and entertainment.

It’s unfair to blame McSally completely for this. She’s an easy scapegoat because she’s a bad politician who’s on the brink of losing another Senate seat in Arizona to a Democrat but this harebrained scheme didn’t come from her. It’s a soft bailout of the struggling tourism industry cooked up by the industry itself. “Industry lobbyists are circulating a plan in Congress and at the White House that would dangle $4,000 tax breaks in front of Americans to get them to begin traveling and spending money at hotels, theme parks and other tourism businesses,” reported the Orlando Sentinel two weeks ago. Trump brought up the idea (the “Explore America” credit) more than a month ago in a roundtable with service-industry executives, no doubt encouraged by the same lobbyists, hoping that it would pay off politically by encouraging economic revival and maybe literally in the form of donations from the industry.

McSally’s taking ownership of it, I assume, because tourism is worth billions to Arizona and she needs some sort of hook to try to get back in the race against Mark Kelly. She’s also accompanying Trump on his visit to Arizona today; maybe he intends to discuss it publicly and wanted there to be a bill in the works somewhere in Congress so that he could point to it as progress towards helping out America’s hotels, airlines, restaurants, and so on.

But it’s a cockamamie idea, and not just because it’ll leave most Americans baffled as to why there’s a tax credit for luxuries like tourism but not for necessities like food. If you’re going to pass a stimulus geared at the tourism industry, notes Forbes, doing it as a tax credit is idiotic. That requires Americans to front the money for the trip themselves at a moment when cash is tight and needed for other things; they won’t see reimbursement from Uncle Sam until next spring. Anyone who has four or eight grand lying around that they’re willing to blow on a trip to Vegas or DisneyWorld — or the Grand Canyon, as McSally is hoping — isn’t in desperate need of a tax credit anyway. It’s the people who don’t have that money lying around that need it, and for more important matters than tourism. If Trump and McSally are serious about this, they should man up and do it as some sort of voucher or gift card that can be used only at travel-related businesses.

In fact, look at the actual text of the bill and you’ll see that the credit is nonrefundable. If you’re poor and you scrape together the money to take a vacation in the belief that you’ll get it all back next year from McSally’s tax credit, you’re in for a rude surprise. Only people with tax liability of $4,000 (or $8,000 for couples) can take full advantage. Anyone who spends, say, $2,000 on a trip out of state and ends up owing $1,000 in taxes for the year will see that $1,000 tax liability offset. That’s all.

The bill is cockamamie for another reason too: Coronavirus infections are spiking in parts of America, and the parts of America where they aren’t probably aren’t eager for an influx of tourists from the parts that are. In normal times, sure, New York City would welcome money from travelers from Florida. As it is, Andrew Cuomo’s threatening to quarantine visitors from that state for two weeks after they arrive. The irony of McSally, of all people, floating this bill is that Arizona is arguably the worst hot spot in the entire United States at the moment, with ICUs at some hospitals at capacity. Who wants to go see beautiful downtown Scottsdale at a time like this?

Which is to say, this is a rare circumstance in which a straightforward federal bailout might make more sense than giving money back to taxpayers and encouraging them to spend it. Normally that’s a fine small-government form of stimulus, but at a moment when (a) retail activity risks spreading a deadly disease and (b) we want to limit outbreaks geographically rather than seeding them around the country, just handing cash to tourism businesses to keep them afloat would probably do less damage than incentivizing Americans to get out and transmit that virus.

Exit question: If we’re going to do this, why limit it to tourism? Where’s the tax credit for money spent on takeout from local restaurants, to help keep them in business? Where’s the tax credit for money spent at neighborhood bars and movie theaters?

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David Strom 6:01 PM on March 29, 2023