Quote:
Originally Posted by CorsiHockeyLeague
No they won't. Almost no one pays over 50% income tax - only people living in California making large sums of money. And obviously no one pays 100% income tax, so no one will pay "all of it back". Furthermore, a lot of people who make large sums of money employ tax planners who take steps to reduce their taxable income as much as possible, so they might keep all of it.
If the strategy is to claw it back next year, treating it as income doesn't come close to being good enough. It needs to be subject to special rules to ensure that the higher your household income, the less you keep.
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Simple solution to this. Make every dollar from Covid relief count as $2 or maybe even $3 of taxable income for taxation purposes.