A The Hill reported. However, as the certainty grows around a (and nothing is truly certain until a is ), so do discussions about how to limit the check so it reaches fewer people. But which people wouldn’t it reach and what does the $1,400 cap have to do with anything?for a seems more likely than ever as of Thursday morning, after President Joe Biden made it clear he wants to hit that figure,
As it happens, the per-person maximum has a tremendous impact on how wide the net is cast for people to receive a payment. Sending stimulus money to some of the nation’s highest earners has been a common concern ahead of the third check and Biden is reportedly open to limiting the recipient base to create a more “targeted” disbursement by potentially changing certain aspects of the.
In fact, some Democrats have floated a new proposal to begin phasing out eligibility at $50,000 per individual taxpayer, according to The Washington Post. Meanwhile, Biden also has also that could allow millions to either receive a or .) We explain what the objection is to a , and how it could potentially become more targeted. We continue to update this story with new information.
More than one way to target the next stimulus check
Earlier this week, a group of 10 moderate Republicans proposed a $600 billion GOP plan with a $1,000 check. While Biden has rejected that, some of its ideas could still affect a third payment. Below, we’ll go over exactly why lawmakers would want to target the next payment and how each change would work on its own.
- Supply a lower check maximum than $1,400 (this works on two levels).
- Lower the maximum from $75,000 per individual and $150,000 per married couple.
- Further change the to reduce the number of people who would get a partial payment.
Why do some want a more ‘targeted’ stimulus check anyway?
The argument here is that a $1,400-per-person maximum would send millions of stimulus checks to people who are considered high earners — in addition to sending the full $1,400 upper limit to many tens of millions of people who fit into the sweet spot that Congress wants to supply with stimulus money.
For the first two checks, that was defined as single taxpayers with anof $75,000 per year or less (and their equivalent for heads of household and married couples). The new $600 billion proposal would make anyone who earns $50,000 a year as a single taxpayer or $100,000 per year as a married couple ineligible to receive a stimulus payment (so long as they don’t have kids — here’s .)
The reason that a $1,400 limit could send checks to people who make “too much money” comes down to the. The formula was written into the respective stimulus bills in a way that provides a partial payment to people who make more than the $75,000 per year threshold, up to a certain upper cap.
Looking at, and proposed $1,400 checks, it’s immediately clear how raising or lowering the per-person maximum — e.g. $1,400 versus $600 — can change the total number of people over the $75,000 income limit who could be eligible for a payment.
For example, using our, a single taxpayer with an AGI below $75,000 would receive the full $1,400 check. At $85,000, this person could receive $1,150; at $90,000 a year, they could get $650; and if they make $102,900, the Treasury would send a stimulus check for $5.
In contrast, aallots a single taxpayer with an AGI of $80,000 a stimulus check for $350. The same person who makes $86,900 a year would get only a $5 check.
The result is that, with Biden’s current formula, more people are eligible overall to receive a stimulus check of some amount, even if it’s a relatively small payment.and spouses add another layer — here’s .
Lowering the maximum check amount can equal fewer payments overall
Let’s say for the sake of argument that the $600 billion GOP proposal were adopted and a $1,000 stimulus check instead of $1,400 were sent. Even if no other changes were made to the formula or to the income limit, lowering the amount would automatically disqualify more people simply because of the way the math works out.
For example, the drop from the first $1,200 stimulus payment to the $600 second stimulus checkwho had otherwise qualified for the first stimulus check. Simply using a $600 base instead of $1,200 reduced the cutoff point for receiving a partial payment.
Said another way, the smaller the per-person maximum, the sooner people who made more than $75,000 a year hit the limit for receiving any money.
With the first check, a single taxpayer — remember, no spouse or kids — could get some amount of stimulus money if they made under $99,000. With the second check, that vanishing point dropped to $87,000. The only difference in that part of the equation was the maximum per-person payment. (Separately,counted for $600 in the second check instead of $500.)
As another illustration of the effects of the base payment, the first stimulus check went out to around 160 million people, while the second payment reached an estimated 147 million households, despite more groups of people qualifying for the second check. Likewise, a $1,000 payment would reach even if that were the sole change to Biden’s proposal.
The next check could exclude earners over a set income
The GOP proposal illustrates this concept well. It seeks to exclude single taxpayers who make more than $50,000 per person and couples making $100,000 from receiving a stimulus check — full stop. People with anunder $40,000 and families earning under $80,000 would receive the full amount, and everyone in between would get something, but less than $1,000.
Dependents of any age would count toward the $500, which does complicate the issue, but the thrust behind the GOP’s argument is to keep people who make more than the “desired” or “targeted” salary from receiving stimulus money.
It could limit the number of people who would receive the full amount
One way to send a check to fewer people would be instituting a firm cutoff. For example, you can’t get a check if you make more than a certain amount of money per year, period. Another, related but different option, is to lower the number of people who get the full check amount. One proposal embraced by some Democrats, according to The Washington Post, would begin phasing out recipients who make $50,000 a year or more.
Say you have a $1,400 check, and people who make under $50,000 are the only ones who would receive the full amount. People with an AGI over that amount would receive a partial payment (up to a certain point) — which would also peter out quicker for people with relatively higher incomes. That calculation would keep the highest earners from receiving a stimulus check for any quantity.
More people would get a partial check than with the $600 billion package proposal, but far fewer would receive stimulus money than with a phase-out starting at $75,000 a year.
What happens if the stimulus check calculation changes?
Changing the math in theused for the first two checks would be one way to limit the number of people who receive a check, and a method that the GOP pitch proposed, in addition to other measures. Let’s just look at this one on its own — for the sake of argument, let’s assume that the final bill would keep the $1,400 maximum and the income threshold at $75,000.
Adjusting the part of the formula that controls partial payments could result in people who make over $75,000 per year hitting the vanishing point to get some amount of stimulus money, even with a $1,400 maximum payment, resulting in fewer checks going out overall.
For example, with the current formula, a $1,400 check would give a person with an AGI of $80,000 a year a $1,150 stimulus check. The GOP bill suggests an adjustment to the formula that would reduce your share by 10% instead of 5% for every $1,000 in income.
Therefore, the more you earn, the less money you could receive, at a higher rate than the current formula. That would effectively mean that people who are relatively high earners would get a much smaller check or none at all.
How about those new qualifying groups?
In addition to supporting larger stimulus checks,two previously excluded groups: (not just children under 17) and all . Combined, that could potentially extend stimulus funds to nearly 20 million people who previously might not have been counted toward the family total. The $600 billion GOP proposal would allot $500 to dependents of any age.
If passed, the outcome would most likely be a larger stimulus check for families that previously qualified (in the case of 17-year-olds anddependents), and some mixed-status families qualifying for a new check for the first time. In all cases, families would have to meet all other eligibility requirements — like an income limit — to receive a future stimulus check.
Until negotiations begin in earnest, we’ll have to see how the stimulus bill and third stimulus check develop. For more information, here’s theand here’s what to know about . Here’s what to do if .