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Voodoo Economics—Congress pushes for COVID-19 relief for the deceased

Senate Republicans are attempting to ensure that not only are dead people entitled to the next round of COVID-19 relief funds but those deceased individuals can retroactively claim payments from prior rounds of relief that they weren’t eligible for at the time because they were dead.

That is an actual proposal under discussion in the current round of talks, according a report by Politico, which dryly notes, “It’s unclear how the IRS would implement the plan.”

If enacted, this would, be the third policy the government has had on the matter of relief payments for dead people. When the government first started sending out relief payments, the IRS decided that it lacked the legal authority to withhold payments from anyone, even the deceased. After news stories began appearing about dead people getting relief checks, the Treasury Department halted the “improper” payments. The Government Accountability Office estimated that $1.4 billion worth of checks went to dead people.

However, many of those improper checks were the result of confusion caused by recent deaths and the cause of many of the recent deaths is COVID-19. So, lawmakers have begun to worry that stopping the payments looks stingy.

“It’s consistent with ordinary tax rules for tax benefits and tax filing obligations” for the deceased,” Michael Zona, spokesman for Senate Finance Committee Chairman Chuck Grassley, told Politico. “In the year of death, one final regular tax return is due and all tax benefits are allowed regardless of when in the year the taxpayer died.”

Another concern is the fear that living people might be mistaken people who recently died with the same or similar names and therefore lose.

It’s not even clear if this proposal will remain in the relief package. For that matter, it is not clear Congress will even pass another relief package, though as of Thursday lawmakers were saying talks were ongoing.

The bottom line is that simply giving away money is not easy as it looks for the government, while lawmakers and bureaucrats who try to make it at least somewhat efficient and less wasteful in the end tend to get overruled.

(Subscription needed for Politico article.)

 

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