The New England Accounting Advisor

Despite several obstacles, President Biden’s stimulus plan was successfully shepherded through both chambers of Congress using the tricky budget reconciliation process and was officially signed into law on March 11, 2021. At $1.9 trillion, the American Rescue Plan (ARP) Act is slightly smaller than the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, but is larger than the $920 billion Consolidated Appropriations Act, 2021 (the Act) passed at the end of the last year. The ARP Act follows the general contours of the previous stimulus legislation in that it provides Recovery Rebate payments to individuals, expanded and extended unemployment benefits, and loans and grants for eligible business. However, the tax portions of the ARP Act bear some notable differences from the previous stimulus plans. These differences are discussed in depth below.

Opportunity zones provide one of the greatest tax deferral vehicles in the tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA). However, the rollout of investment opportunities in qualifying funds has been hampered by confusion and uncertainty.

The tax plans for each of the candidates in the 2020 Presidential campaign involve some varied and unique proposals, including a wealth tax, a tax on securities trading transactions, and new refundable credits for low-income housing. An understanding of the context out of which these proposals arise can help to explain how these plans fit into the real world. For example, a perceived wealth inequality is the undercurrent for many tax proposals. But these proposals and their underlying motivations must also be squared with the reality of the federal budget.

A major discussion point during the multiple attempts to repeal and replace the Affordable Care Act (ACA) was that health insurance premiums are rising too quickly, jeopardizing their affordability by many Americans. However, premiums are only one component of health care costs and a singular focus on them can be misleading in the overall health care discussion. The costs of medical expenses not covered by insurance (e.g., deductibles) and the costs of prescription medication are also important cost components of health care. But all of these items have one common thread: they represent indirect measures of the increasing cost of medical care. Once the focus is turned directly to the cost of medical services, two questions arise for those interested in tax policy. Does tax policy affect the cost of care, and can tax policy be used to decrease that cost?