CORONAVIRUS

Fact Check: Americans could get a $4,000 tax credit for domestic travel in stimulus

A travel tax credit has been mentioned as debate over the second stimulus package continues with the coronavirus continuing to spread in the United States.

Fact Check: Americans could get a $4,000 tax credit for domestic travel in stimulus
Kevin Lamarque REUTERS

The debate over stimulus checks and tax breaks continues in the United States. The first stimulus check was sent out in March and was worth $1,200. Democrats want a second stimulus check sent out to struggling Americans with millions losing their means of income. Republicans have cooled on the idea and have instead proposed a $4,000 tax credit for travelling within the country.

The Explore America tax credit is designed to get the economy back on its feet again whilst not directly sending money to citizens. "Create an ‘Explore America’ — that’s ‘Explore,’ right? Explore America tax credit that Americans can use for domestic travel, including visits to restaurants. That’s a big deal,” Trump said previously when it was first mentioned.

The president says a second stimulus package is coming and specifically said there would be a check but that still needs to be decided. The Democrats passed the HEROES Act through the House of Representatives but are having a harder time getting the Senate to sign it into law.

According to McClatchey, a senior White House official said: "One of the things that is very much on the table is a tax deduction for Americans to do tourism activities."

The president’s National Economic Council director, Larry Kudlow, said that a tax credit would be a good idea and says there has been some agreement on its implementation. “Pretty much from day one we’ve looked at that, and there seems to be a very broad agreement with congressional members that that would be a good thing to do,” Kudlow said.

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The Explore America tax credit would do exactly what it says. People would be given a tax credit for exploring the country, including visiting restaurants, bars and taking holidays.

"So what I'm doing is I'm going to tell Secretary [Steven] Mnuchin and also our great secretary of labor ... to immediately start looking into the restoring of the deductibility of meals and entertainment costs for corporations that set the restaurant business back a lot when it was done originally, and then done not so long ago. And we're going to go to deductibility so that companies can send people to restaurants. I think it'll have a tremendous impact and maybe keep them open," Trump said at the start of April.

The problem now is that many states are starting to reintroduce measures to stop the spread of the virus as they see massive increases in the number of cases. New York, New Jersey and Connecticut have released a travel advisory that means people entering any of the states from outside will have to quarantine for 14 days. If the number of cases continue to increase, a travel tax break might not be very useful.

FACT CHECK: True. A $4,000 tax credit is being explored as a potential inclusion in the next round of stimulus relief but nothing has been decided on yet and there remain some doubts over whether it should be.