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The Future of America: How COVID-19 has Effected the US Economy

Posted on by mcavanaugh

 

 The COVID-19  pandemic has caused major adjustments to the lives of people all around the globe.  It has restructured our way of life and has left the future of the US unknown.  In Congress, both Democratic and Republican parties struggle to successfully agree on solutions that would rebound the current economic slump.

 One proposed solution involves instituting a revised federal income tax deduction for employed citizens; reducing the percentage of income that is taxed.  The Democratic party has left Republicans to be suspicious of causing a greater income inequality between social classes in our economy.  Although across the board tax deduction seems to be a fair and reasonable solution resulting in an immediate fix.  The difference in opinion between these parties will affect the population differently.  The proposed revised income tax calculation, from the Democratic viewpoint, would lower the amount of paid income tax for everyone.  Although this would help small business and low-income communities, those in the upper-class would stand to benefit more from this proposal than anyone else.  Republican Phil Boyle of Long Island proposes that by increasing the amount of paid income tax for those with higher and disposable incomes, would better support small businesses and the middle and lower working class by allowing these populations to keep their money.  Even though the tax deduction will improve the financial situations of struggling small businesses, the wealthier will benefit way more from this proposal because they are able to pay for the deduction.  This still allows the economy to keep growing while trying to help those in the lower spectrums of the economy who have lost their jobs.  On one hand, everyone would benefit from the reduction, but it poses an interesting debate on the morality of determining who benefits and who is responsible for picking up the slack.

 Another issue that has impacted the US economy is the occupational restructuring of the workforce due to  COVID-19; occupational effects refer to the grouping of essential and non-essential workers.  The correlation between essential and non-essential employees differs in their level of exposure and income.  Essential occupations include healthcare workers, packaging companies, restaurants and grocery workers.  These employees are all at a higher risk of contracting COVID due to their close interactions with ‘customers’.  Non-essential;  small businesses and even self-employed workers have been faced with the reality they may lose their jobs and wages because the pandemic has called for non-essential businesses to close down.  The government has put together stimulus packages to try and help struggling businesses by enacting the COVID-19 Relief for Small Businesses Act of 2020.  This act awards businesses a $50,000 loan under the Economic Injury Disaster Loan, who have between two and fifty employees and who have lost a minimum of fifty percent of their income due to the coronavirus outbreak.

While many have been able to stay afloat during this time, they risk their safety and the safety of others for the sake of trying to keep the economy in tack.

 

Works Cited

Barton, Stephanie. “The Difference Between Republicans vs. Democrats on Taxes.” Investopedia, Investopedia, 25 July 2020, www.investopedia.com/articles/economics/09/us-parties-republican-democrat-taxes.asp.

Koh, David, and Hui Poh Goh. “Occupational Health Responses to COVID‐19: What Lessons Can We Learn from SARS?” Wiley Online Library, John Wiley & Sons, Ltd, 13 May 2020, onlinelibrary.wiley.com/doi/full/10.1002/1348-9585.12128.

Povich, Elaine. “Tax Hikes in a Pandemic: Some States, Cities Say Yes.” The Pew Charitable Trusts, 17 July 2020, www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2020/07/17/tax-hikes-in-a-pandemic-some-states-cities-say-yes.

“Senate Small Business Committee Democrats Release Relief Proposal to Help Small Businesses Address Public Health-Related Challenges from Coronavirus Outbreak.” U.S. Committee on Small Business & Entrepreneurship, 19 Mar. 2020, www.sbc.senate.gov/public/index.cfm/2020/3/senate-small-business-committee-democrats-release-relief-proposal-to-help-small-businesses-address-public-health-related-challenges-from-coronavirus-outbreak.

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26 Comments

  1. While I find the arguments towards a tax deduction to be sounds, I have to disagree with their effectiveness at stimulating the economy. When we have used stimulus in the past, be it either tax deductions or stimulus packages, it has not directly resulted in immediate stimulus. Take for example the airlines after 9/11. Tracked by the ETF XAL, the airline stocks plummeted and didn’t recover until almost 2003, while passenger volume consistently decreased year after year. This was despite President Bush reducing taxes both in 2001 and 2003. The decrease uncovers a major, underlying issue with the economy, it relies on people feeling safe enough to do something. Once 9/11 was a distant memory and the economy recovered from the Recession of 2008, people started flying again. It will be the same with the Coronavirus, no matter how much stimulus is given out, the economy will still decline. This will not be seen in the stock market charts, which are only up based on a few companies having record profits and the rest having good forward guidance to after the virus, inequality will still soar.
    I agree that occupational restructuring will occur extremely as a result of the virus, but I also fear that there will not be quality jobs for those displaced workers to receive. Our change to be fully automated will progress faster as a result of the virus, leaving people out of their jobs as they get replaced by robots. There are very few remedies currently thought of to fix this, with the major one being a Universal Basic Income. If this pandemic teaches us anything, it will be that the two parties as they currently stand are incapable of coming together, except in rare circumstances, to do something that will help Americans if there is a dollar sign value on it that will result in either debt or increased taxes, and I feel and fear that we will not pass this and many millions will be left unemployed and starving.

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