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[USA] proposed tax credit for domestic travel

[USA] proposed tax credit for domestic travel

Old Jun 24, 20, 10:34 am
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Question [USA] proposed tax credit for domestic travel

Originally Posted by notquiteaff View Post
A glimmer of hope can be found in the CNN article about the EU discussions.

https://www.cnn.com/2020/06/23/polit...vel/index.html



(Germany is already doing that with their quarantine list)

Alas, they also mention reciprocity:



and it appears there is little interest in negotiations on the US side.



I think it’s highly unlikely that the US (or any part of it) would be included on the “allowed” list on July 1, but perhaps they’ll work out something in the not-to-distant future for residents safe-ish states. As I mentioned in the past, I think the 2020 summer vacation season is for the most part ruined no matter what. Few travelers (outside FT) are booking overseas vacations at a moment’s notice, and job losses and economic uncertainties and limited airline capacity will do their part, too.
The administration is pushing something called The America Trip act or something like that. It would offer up to $4000 travel tax credit per person for trips over 50 miles from home.

So maybe they really want to push domestic tourism this summer, figuring it will boost the domestic economy to push Americans to spend in the US.
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Old Jun 24, 20, 10:37 am
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Originally Posted by exp View Post
The administration is pushing something called The America Trip act or something like that. It would offer up to $4000 travel tax credit per person for trips over 50 miles from home.

So maybe they really want to push domestic tourism this summer, figuring it will boost the domestic economy to push Americans to spend in the US.
And why are they pushing domestic travel? I’ve never heard of a government paying its citizens not to travel abroad.
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Old Jun 24, 20, 10:42 am
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Originally Posted by Owenc View Post
And why are they pushing domestic travel?
To stimulate the economy.
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Old Jun 24, 20, 10:43 am
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They’re paying people not to travel aboard. How is that stimulating the economy?
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Old Jun 24, 20, 11:01 am
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Originally Posted by exp View Post
The administration is pushing something called The America Trip act or something like that. It would offer up to $4000 travel tax credit per person for trips over 50 miles from home.

So maybe they really want to push domestic tourism this summer, figuring it will boost the domestic economy to push Americans to spend in the US.
“Explore America Tax Credit”, apparently.

Here is some background info:

https://www.usatoday.com/story/money...ers/111982488/
https://loyaltylobby.com/2020/06/19/...mulus-payment/

Not really clear to me that this is likely to happen. And even if it does go through in some form, summer 2020 will be over.

Last edited by notquiteaff; Jun 24, 20 at 11:07 am
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Old Jun 24, 20, 11:35 am
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Originally Posted by Owenc View Post
They’re paying people not to travel aboard. How is that stimulating the economy?
Two scenarios (under normal circumstances):

1) I fly to the UK for twelve days and spend ~ $5500 on hotels/lodging, another $2000 on food/drinks, $1000 on transportation within the country, and let's say another $1000 on entertainment items (a few rounds of golf, souvenirs, sightseeing/general tourism, etc.).

2) I fly to California for seven days and spend ~ $3000 on hotels/lodging, $1000 on food/drinks, $350 on a rental car, and maybe another $750 on entertainment.

Scenario two directly stimulates the US economy. Scenario one does not.
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Old Jun 24, 20, 11:52 am
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Originally Posted by Owenc View Post
They’re paying people not to travel aboard. How is that stimulating the economy?
It will certainly have some level of stimulating effect for the travel and hospitality industries here in the US. Whether it ends up being more or less stimulating than just directly handing out the money is up for debate, but I don't think you can deny it will help travel-related companies here in the US.

For example, personally, it wasn't in my plans to travel domestically in the US this year. But if there's a $4000 tax credit sitting on the table to pay for the trip you can be sure that I will be booking something. So that's $4000 that will be going to airlines, hotels, and local restaurants that wouldn't otherwise be in their pockets.
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Old Jun 24, 20, 11:55 am
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Originally Posted by cmd320 View Post
Two scenarios (under normal circumstances):

1) I fly to the UK for twelve days and spend ~ $5500 on hotels/lodging, another $2000 on food/drinks, $1000 on transportation within the country, and let's say another $1000 on entertainment items (a few rounds of golf, souvenirs, sightseeing/general tourism, etc.).

2) I fly to California for seven days and spend ~ $3000 on hotels/lodging, $1000 on food/drinks, $350 on a rental car, and maybe another $750 on entertainment.

Scenario two directly stimulates the US economy. Scenario one does not.
Scenario 1 might add revenues to a carrier like UA, DL, AA. US govt. bailed out their domestic airlines and they may again.
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Old Jun 24, 20, 12:02 pm
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Originally Posted by exp View Post
Scenario 1 might add revenues to a carrier like UA, DL, AA. US govt. bailed out their domestic airlines and they may again.
For all of my recent vacations, the flights were only in the range of 20-30% of the total cost, which leaves 70-80% of the pie to go to hotels, restaurants, bars, museums, shops, etc. So even if US airlines lose out on an international ticket, the gain from the rest of the local economy will more than make up for it.
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Old Jun 24, 20, 12:02 pm
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Originally Posted by exp View Post
Scenario 1 might add revenues to a carrier like UA, DL, AA. US govt. bailed out their domestic airlines and they may again.
Yes, but scenario 2 will add revenues to US hotels, tourist attractions, restaurants, etc in addition to airlines. Scenario 1 doesn't.
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Old Jun 24, 20, 12:06 pm
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Originally Posted by Seph87 View Post
For example, personally, it wasn't in my plans to travel domestically in the US this year. But if there's a $4000 tax credit sitting on the table to pay for the trip you can be sure that I will be booking something. So that's $4000 that will be going to airlines, hotels, and local restaurants that wouldn't otherwise be in their pockets.
$8000 if the reports are correct that it’s a 50% credit:

One idea would involve giving people a credit of up to 50% on spending of up to $8,000 per household. Permitted expenses would include airfare, rental car charges, hotels, theme parks, and restaurants. The credit would apply in 2020 and 2021, although it's unclear whether the provision would be limited to a total of $4,000 or would allow that amount each year for two separate years.”

Depending on the details (e.g., income limit phaseout?) it could be “free” money for me personally as it would reduce the cost of domestic travel I would likely have paid for anyway (family visits, road trips, week in Hawaii). But I wouldn't count my chickens at this point...
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Old Jun 24, 20, 12:08 pm
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Guess how much such a credit would drive up prices
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Old Jun 24, 20, 12:30 pm
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Originally Posted by exp View Post
Scenario 1 might add revenues to a carrier like UA, DL, AA. US govt. bailed out their domestic airlines and they may again.
Scenario 1 might, scenario 2 definitely would.
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Old Jun 24, 20, 3:18 pm
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Originally Posted by exp View Post
The administration is pushing something called The America Trip act or something like that. It would offer up to $4000 travel tax credit per person for trips over 50 miles from home.

So maybe they really want to push domestic tourism this summer, figuring it will boost the domestic economy to push Americans to spend in the US.
The problem is that the Trump Tax Scam made it impractical for millions of people who used to itemize their taxes to continue to do so. Even $4k extra in deductions would still not be enough to tip the balance away from the standard deduction for many people, including myself (I used to itemize every year due to a hefty amount of mortgage interest until 2018). In other words, it is yet another handout/tax cut to the top 5%, with no real benefit to the masses (since those people who would take advantage of it already have the means and incentive to travel, regardless).
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Old Jun 24, 20, 3:51 pm
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Originally Posted by downinit View Post
The problem is that the Trump Tax Scam made it impractical for millions of people who used to itemize their taxes to continue to do so. Even $4k extra in deductions would still not be enough to tip the balance away from the standard deduction for many people, including myself (I used to itemize every year due to a hefty amount of mortgage interest until 2018). In other words, it is yet another handout/tax cut to the top 5%, with no real benefit to the masses (since those people who would take advantage of it already have the means and incentive to travel, regardless).
It's being described as a credit versus a deduction. Credits reduce your tax liability on a 1-1 basis and don't require that you itemize. This is different than the mortgage interest deduction.

Of course only those who pay at least $4k in federal income tax can take advantage of the entire credit.

That said, I doubt this will happen, but we'll see.
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