The US got an unexpected stimulus check-related update on Tuesday, from of all places the Paris-based Organization for Economic Cooperation and Development. The world economy — according to this organization which boasts around three dozen or so member countries, including the US — looks set to return to the way it was before the pandemic by the summer. And, again, according to the organization, it’s thanks to efforts like government stimulus in the US, where President Biden’s $1.9 trillion coronavirus relief bill was just passed by the Senate and now awaits only a quick second vote in the House as soon as Wednesday to incorporate changes to the bill before it’s signed into law.
“Activity in many sectors has picked up and partially adapted to pandemic restrictions,” the OECD said on Tuesday. “Vaccine rollout, although uneven, is gaining momentum and government stimulus, particularly in the United States, is likely to provide a major boost to economic activity.” Here’s why this is especially true in the US, with many families actually poised to receive a lot more from the bill than the $1,400 stimulus checks that the media and as well as the attention of politicians have focused on.
Right off the bat, based solely on the stimulus checks themselves, it seems a pretty reasonable assessment that most families should get more than $1,400. Take a couple living together whose household adjusted gross income is less than $150,000, for example. They’ll get a single payment of $2,800 solely from the stimulus check itself ($1,400 x two adults). Likewise, a two-parent household with two dependent children — that household will get the $2,800 for the two adults, as long as that household stays under the same income requirement, in addition to an extra $1,400 for each dependent child. So, $5,600 total.
These payments, as we said, are income-based and the IRS will use your 2020 tax return (if you’ve already filed it) to double-check that eligibility. Otherwise, the tax agency will revert to checking your 2019 tax return, instead. Meanwhile, let’s keep going with how much money families can expect from the stimulus bill:
To that $5,600 we mentioned above for the family of four, add another child tax credit of $3,600 for children up to age 6 and $3,000 for children ages 6 to 17, which means the expanded tax credit made possible by President Biden’s stimulus bill would provide an extra $6,000 to $7,200 per family — compared to a $2,000 tax credit per child provided by the existing tax code. Check out our earlier post here, for more detail along these lines, and especially for a reminder that the stimulus bill is significant for reasons that go well beyond the $1,400 direct payments.
As if all of the above wasn’t enough, a new analysis from the non-partisan Urban Policy Tax Center also finds that the stimulus package will give the poorest 20% of Americans a 20% increase in their income. According to the analysis, the $1.9 trillion legislation will lower peoples’ federal taxes in 2021 by an average of $3,000 and simultaneously raise net incomes by around 3.8%.
