The last five months have been unlike anything our country has ever been through. A global pandemic has taken the lives of over 100,000 Americans and cratered what was a thriving economy. And just when things started to look better – the number of positive COVID-19 tests resurged.
In an effort to keep businesses afloat and Americans from losing their livelihoods, Congress has taken drastic steps to inject funds into the economy by passing trillion-dollar stimulus packages. While those have helped, how many more times can the government rack up new debt in order to offset the harm from a disease that has no end in sight?
The good news is that over the last several decades, Congress already passed laws to make billions of dollars available to companies through tax credits, and the U.S. Treasury already owes these moneys to companies. These credits are called GBCs or General Business Credits.
The bad news is that companies have to wait up to 20 years to get their money from the government, and in the current economic climate, these same businesses are laying off their employees and curbing investments to conserve depleted cash balances.
These credits are not handouts nor freebees. They are earned by companies that develop innovative solutions or deliver betterments for society – such as cleaner energy and investments in underprivileged communities. Congress has rightfully understood that innovations and betterments could be developed faster by the private sector, so it granted tax credits to help incentivize and fund the research, development, build-outs, and operations of these socially important causes.
Unfortunately, with COVID-19 and the current state of the economy, many businesses won’t generate enough taxable income in 2020 to claim even one dollar of these already earned credits. So, without the income to claim the credits, companies have little incentive to continue the activities that allow them to earn these GBCs. Minority and underprivileged communities are already some of the hardest hit by the COVID-19 crisis, and if businesses cease to engage in programs that benefit these communities, they will only be further displaced by the pandemic.
In these times, why should companies have to wait? They used, and are using, their own money to do what Congress desired when designing these programs. Waiting up to 20 years might have made sense at one point, but it makes no sense now. Congress should let companies recall this interest-free loan; give them their hard-earned cash this year so they can keep their employees working through slow times; continue to support these socially important causes; and inject money into our economy by reinvesting in their businesses.
And, remember, these billions are already accounted for in the government’s budget, so this isn’t giving out new money nor increasing spending -- it is just giving companies the money they have already earned.
It is very clear that the pandemic isn’t going away anytime soon. States that started to reopen early, such as Arizona, California and Texas, are now scaling back those efforts, imposing further damage to already devastated businesses. If we are going to get through this without Americans losing everything they’ve worked for, Congress will have to act again. It only makes sense that part of the next step should be allowing companies to immediately claim the entirety of the GBCs they’ve already earned.
This issue is not a Democratic or Republican issue – constituents and businesses of all shapes and sizes would benefit from this effort. The government budget accounts for these GBCs already, so there’s no need for new spending and debt. Desperate businesses will have access to funds they otherwise wouldn’t have in time. And the economy gets an immediate injection of billions of dollars. It’s a win-win-win.
Brian Johnson is the executive director of the Recovery Coalition, a nonpartisan, industry-backed organization that advocates for common sense solutions to the COVID-19 economic crisis.