BAR HARBOR — Amidst challenging and uncertain times, folks in Maine and elsewhere across the country have a bit of help on the way.
Individuals and businesses are set to benefit from a stimulus bill passed by Congress and signed Friday by President Donald Trump. The bill, known as the Coronavirus Aid, Relief and Economic Security (CARES) Act, contains a record $2.1 trillion in relief spending.
The stimulus package comes as the third bill in Congress’s four-part response to the coronavirus. President Trump signed the first bill, addressing vaccine research and development, into law March 6, and the second, addressing paid leave, unemployment benefits and money for free testing, into law March 18.
The bill provides $301 billion worth of cash payments to be distributed to American tax filers who reported income below various thresholds. It also includes $500 billion for business, states and communities, roughly $350 billion in forgivable loans for small businesses through the Paycheck Protection Program, $250 billion in expanded unemployment benefits and $117 million in funding for hospitals.
“This is a huge injection of liquidity into the economy that should keep things afloat for maybe two or three months,” said Jon Reisman, an economist and associate professor of economics and public policy at the University of Maine at Machias. “We’re talking about a short-term fix that’s going to serve as a flotation device.”
A notable provision is the distribution of recovery checks to filers who reported adjusted gross incomes below various thresholds in their 2018 or 2019 tax returns. The IRS will use 2019 returns for those who have already filed this year and 2018 returns for those who have yet to do so.
Single filers who reported $75,000 or less in adjusted gross income will receive full checks of $1,200, and those filing jointly and reporting less than $150,000 will receive $2,400. Head-of-household filers who reported $112,500 or less in adjusted gross income will receive $1,200 plus $500 for every child under the age of 18.
Many filers who reported incomes above the aforementioned thresholds will still receive checks, though the rebate amount will decrease on a sliding scale for higher earners. Rebates phase out completely at $99,000 for single filers, $198,000 for joint filers and $136,500 for head-of-household filers.
The money, which Treasury Secretary Steve Mnuchin said will be distributed “within three weeks” for those whose direct deposit information is on file, is being made available through an advance on a newly created tax credit that will appear on filers’ 2020 returns. Checks are non-taxable and will have no impact on the refunds filers will receive in 2021.
The bill also allows small businesses to seek assistance through a variety of loans, which can be forgiven if businesses use the funds to “retain workers and maintain payroll,” according to the bill’s text. That provision stands to benefit Downeast Maine, where the economic downturn and social distancing guidelines are slated to negatively affect a tourism- and hospitality-heavy economy in the coming months.
Still, with nonessential businesses now shuttered and restaurants reduced to takeout-only operations, it will be difficult to fully alleviate the economic hardships the coronavirus is set to cause. Reisman is also worried about the addition of $2.1 trillion to the national debt and the impact a likely economic downturn would have on state and local governments.
“You could see a lot of changes there,” said Reisman, who said state-level austerity measures could be a possibility in the near future. “States don’t have the ability to run a deficit the way the federal government can.”
Maine’s U.S. Senate delegation, Susan Collins and Angus King, both voted in favor of the bill, which passed 96-0. The U.S. House passed the bill remotely via voice vote.
After the bill was signed into law Friday, Governor Janet Mills expressed gratitude for its passage to all four members of Maine’s congressional delegation as well as President Trump. Yet the Governor also implied that additional measures will be needed in the weeks and months to come.
“This emergency package will support the state’s response to COVID-19, bolster the economy and provide temporary but much-needed relief to Maine people and small businesses struggling to make ends meet because of the virus,” Mills said in a statement issued Friday. “There is no question that more is needed, but I welcome this as a positive step forward for Maine.”