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1 Budgetary Effects of the 2020 Coronavirus Pandemic 1 (June 5, 2020)

handle is hein.congrec/byesot0001 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Phillip L. Swagel, Director U.S. Congress Washington, DC 20515 June 5, 2020 Honorable Rick Scott United States Senate Washington, DC 20510 Re: Budgetary Effects of the 2020 Coronavirus Pandemic Dear Senator: As you requested, this letter provides information about certain budgetary effects of the 2020 coronavirus pandemic and the federal government's response to it. Effects of Tax Deferrals on Revenues First, you asked about federal revenues that will be lost because of tax deferrals. As you noted, revenues collected since late March have been much weaker than those collected during the same period last year and also much weaker than the Congressional Budget Office projected earlier this year. The lower revenues result in part from the economic disruption caused by the pandemic, which has reduced wages and other taxable income, and in part from the government's actions to address that disruption. The federal government's response included a variety of changes to tax rules. Some of them reduce the amount of taxes that businesses and individuals owe; others just allow taxpayers to defer paying taxes. CBO anticipates that most of the revenues affected by those deferrals will be collected in July, some will be collected in later years, and some will be permanently lost. CBO does not have an estimate of the amounts that fall in each of those categories. Payroll Taxes. The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows employers to delay their payments of payroll taxes- until 2021 and 2022-on wages paid from March 27, 2020, through December 31, 2020. That delay provides additional liquidity to businesses that may be facing reduced revenues or increased costs as a result of the www.cbo.gov