A ‘Wacky’ Tax Credit Idea: $4,000 for Vacation

A ‘Wacky’ Tax Credit Idea: $4,000 for Vacation

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Sen. Martha McSally (R-AZ) wants to use a tax credit to encourage Americans to take a vacation over the next two years. Under her proposed TRIP Act, adults would be able to tap a $4,000 tax credit for travel within the U.S., with eligible expenses including lodging, transportation costs and entertainment. And the credit would apply to each adult, so a couple could claim an $8,000 credit, plus another $500 per child.

While McSally says her proposal is aimed at reviving the domestic tourism industry, critics point out that the non-refundable credit won’t do much good for the millions of Americans facing lost jobs, reduced incomes and an uncertain future.

“That idea [is] one of the wackiest I’ve come across in recent months in an effort to stimulate the economy,” financial adviser Ric Edelman told Yahoo Finance. “It’s tone deaf and doesn’t acknowledge that there are millions of American households who can’t afford to pay their rent or afford to buy food or medicine.”

Matthew Gardner, a senior fellow at the left-leaning Institute on Taxation and Economic Policy, says that the loose requirements in the bill mean “that any car owner with an ounce of creativity should be able to gin up an excuse for taking a tax credit for every tank of gas they’ve purchased in 2020.” That, says Gardner, makes the bill “an invitation to tax avoidance.”