Almost immediately after former President Trump declared COVID-19 a national emergency in March 2020, the Tax Foundation, an Atlas Network partner, launched a website producing daily analysis of legislative proposals addressing the crisis in the United States. The COVID-19 Tax Resource Center has quickly turned into the go-to source for state and federal lawmakers.
“The goal of the Tax Foundation COVID-19 Resource Center,” explained the Tax Foundation’s Michael Ressegue, “is to provide an easily accessible and understandable resource to taxpayers, media, and policymakers that assists them in grasping the numerous moving parts involved in the economic responses to the pandemic.”
The Tax Foundation was one of the first think tanks to highlight how the existing structure of state unemployment insurance (UI) taxes would lead to substantial tax increases on struggling businesses. In the very early days of the pandemic, the Tax Foundation published “Are States Prepared for Skyrocketing Unemployment Insurance Claims?” highlighting the impending cash shortage many states would soon have to manage. By analyzing and assessing each state’s UI health and solvency level, the report painted a bleak picture: “21 states fall short [of a healthy solvency level], with some of the largest states, with the largest pool of employees, faring the worst,” the report continued. “To put these numbers in context, consider this: if unemployment claims simply matched the average of the three highest benefit costs over the past two decades (which would mean fewer claims than in the Great Recession), California’s trust fund would run out in about 10 weeks.” The research was groundbreaking and was a savior for many state legislatures, which chose to adopt temporary freezes to the UI system.
In April, the Tax Foundation doubled-down on its COVID-19-related research, publishing “Tax Policy after Coronavirus: Clearing a Path to Economic Recovery.” The comprehensive report, which, in addition to the organization’s other COVID-19 resources, was viewed almost five million times, has been an important roadmap for federal and state lawmakers. While many think tanks were offering solutions aimed at short-term recovery, the Tax Foundation was focused on long-term sustainability.
“Our work and recommendations presaged many of the debates this year, including what to do about upcoming changes in the tax treatment of investment in 2022 and 2023, the Biden administration’s approach to tariffs, and helping gig economy workers get back on their feet as the economy reopens,” continued Ressegue. “Two bills were introduced—one in the House by Rep. Arrington (the ALIGN Act), and one by Sen. Ted Cruz and Sen. Martha McSally in the Senate (CREATE JOBS Act), both of which took many of the design recommendations we’ve made in our educational materials. We personally briefed staff in both offices on the value of full expensing, leading to better designed policy in those proposals. Also, our recommendation to provide liquidity by expanding net operating loss carrybacks continued to reinforce the importance of retaining existing net operating loss measures in the CARES Act, helping to stop attempts to repeal that source of liquidity.”
While the full impact of the Tax Foundation’s COVID-19-related research is impossible to know, it is clear that it has been one of the first to address several looming economic fallouts and offer real solutions aimed at a long-term recovery.
Atlas Network supported the Tax Foundation’s COVID-19 Tax Resource Center with a grant.
