COVID ‘relief’ bill will make some people poorer if they work more

COVID ‘relief’ bill will make some people poorer if they work more
Image: CDC

Joe Biden’s massive $1.9 trillion COVID “relief” bill will discourage many people from working, shrinking the size of the economy. In the Wall Street Journal, two economists say it could eliminate as many as eight million jobs.

If you have a family, especially a large one, you may end up poorer if you work more this year, thanks to the COVID “relief” bill. That will shrink the economy by disincentivizing work.

If you are married, and your household income rises from $150,000 to $160,000, you could actually end up with less money as a result. Under the bill, a married couple making $150,000 gets $1400 in “stimulus” payments, not just for each parent, but also for each of their children. But a married couple making $160,000 gets nothing under the bill, for either themselves, or their children. All of their “stimulus payments — which could exceed $10,000 for a large family — are taken away just because their household income rose by a mere by $10,000.  Plus, the family has to pay taxes on the additional $10,000 in income.

To reduce your income enough to qualify for COVID payments, you may need to work less. As the Wall Street Journal notes, families with incomes just above $150,000 will “have incentives” to “reduce their” incomes in order “to get larger payments.” The “fast phaseout” of payments as their income rises, “on top of existing tax rates and phaseouts of other tax breaks,” would create “very high marginal tax rates for those households. A married couple with two children making just over $150,000 could face effective marginal income-tax rates approaching or exceeding 100%…That means every additional dollar they make would cause them to pay about an additional dollar in taxes.”

Phasing out thousands of dollars in benefits just because your family made a few thousand dollars more is “very steep” and a “mistake,” says Aaron Klein, an economist at the Brookings Institution.

Rapid phaseouts of benefits, known as “income cliffs,” discourage people from working and earning more money. Income cliffs in past healthcare legislation shrank the labor force by the equivalent of two million jobs by discouraging people from working.

The COVID relief bill also rewards many federal employees for not working, by paying them $1,400 per week to stay home if their kids are out of school, notes Jon Miltimore of the Foundation for Economic Education. Federal employees qualify for this payment even if they chose to have their children attend school remotely, rather than in-person. (In my school district, parents can choose whether to have their kids stay out of school and learn remotely or attend school in-person. So federal employees can keep their kids home in order to collect this money, while doing none of the work they were hired to do for the taxpayers).

Less than a quarter of the money in the COVID relief bill is for stimulus payments to taxpayers. The COVID relief package is full of unrelated waste and partisan kickbacks, says Brad Polumbo of the Foundation for Economic Education.

Meanwhile, state and local governments will be showered with cash by the COVID relief bill. As the CNN’s John Harwood notes, the COVID relief bill gives $350 billion to state and local governments, even though “far exceeds” what they lost “from the pandemic.” Local tax revenue actually rose in 2020, as did state tax revenue in 21 states.  Ironically, legislators are already planning tax increases in several states with growing revenue, such as California.

While 12 million taxpayers will be excluded from COVID stimulus payments because of their income, that will reduce the bill’s cost less than 1%.

“The COVID relief bill is chock full of anti-white reverse racism,” says Betsy McCaughey, the former Lieutenant Governor of New York. “The bill offers” farmers of certain races “total debt forgiveness of up to hundreds of thousands of no-strings dollars per farmer. But white men needn’t apply.” “Discrimination likewise mars the bill’s aid to restaurants,” which excludes white males from the early stages of relief.

Economists have said that the COVID relief legislation is too costly and would eventually shrink the economy. Critics of Biden’s plan include even liberal economists like Larry Summers, a former treasury secretary and president of Harvard. The Congressional Budget Office says the bill will shrink the economy in the long run.

By massively increasing the national debt, the COVID relief bill will drive up borrowing costs and make it harder for businesses to attract capital needed to create jobs. “The existence of the debt saps the rest of the economy,” says a University of Pennsylvania researcher. “When the government is running budget deficits, the money that could have gone to productive investment is redirected…you’re taking away from the capital that we need to grow our economy in the future.”

Hans Bader

Hans Bader

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department. Hans writes for and has appeared on C-SPAN’s “Washington Journal.” Contact him at


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