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Brewster Bill Would Exempt Stimulus Funds from State and Local Tax

Stimulus Check

State Sen. Jim Brewster today said he is introducing legislation that would exempt federal coronavirus stimulus funds from state and local taxation.

“The idea is to immediately drive money out to those in need now and spur a swift recovery once the COVID-19 health risk subsides,” Brewster said.  “The last thing we need to do is give Americans stimulus to cover expenses and then take back some of it in taxes.

“Stimulus funds should not be subject to state or local taxation, period.”

The federal stimulus plans call for individuals making up to $75,000 per year ($150,000 married) to receive a $1,200 check plus $500 per child.  Stimulus checks will be reduced then phased-out for individuals making up to $99,000 for individuals ($198,000 married).

“There are so many families struggling with job loss and economic dislocation as a result of the pandemic,” Brewster said.  “The short-term goal must be to pay costs and jump start the economy once we’ve dealt with the serious health risk.”

Brewster said the state has a significant role to play in boosting a rapid economic response after the medical community is satisfied that the health threat has been mitigated.  Last week the lawmaker unveiled a six-point plan to fill in gaps in the $2.2 trillion federal stimulus.

Brewster’s six-point recovery plan includes:

  • Unemployment Compensation (UC) Booster:  The UC booster would augment and supplement evolving federal efforts to help the unemployed.
  • Bridge Grants: Create short-term bridge grants to get business up and running as soon as possible and cover near-term expenses.  Provide additional assistance to qualifying small business can be in the form of zero-interest or very low-interest loans. 
  • Expand Bonding Capacity: Expand or repurpose Pennsylvania’s bonding capacity with new financing through either the Commonwealth Financing Authority or other bonding authority with funds immediately available for grants.  Sweep unencumbered General Fund and special fund accounts to finance recovery efforts.
  • Special Tax Provisions — Expand net loss carryforward program to cover taxes and help reduce future pandemic-related tax liabilities. 
  • Accelerate Infrastructure Improvement Projects: Push state funds out now and open financial levers to fund water, sewer, transportation and community improvement projects.
  • Pandemic Recovery Czar: Coordinate the response and the distribution of funding specifically related to the pandemic through a single contact point in state government — a “recovery czar.” 

Last week, Brewster sent a letter to Gov. Tom Wolf detailing his economic recovery plan.

“The priority right now is to protect the health and safety or our citizens and do what is necessary to stop the coronavirus,” Brewster said.  “Then, we have to develop plans for a meaningful recovery to lift all.

“Pushing federal stimulus funds out now and not taxing them later is the correct approach to aiding families dealing with the pandemic.”

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