Financial Positions of U.S. Public Corporations: Part 4, Tax Relief

Abstract: This blog post is the fourth in a series that discusses how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response. In this post, we discuss the adjustments to federal tax policy that have been initiated to support U.S. businesses and their possible effects. These measures represent a significant fiscal cost ($280 billion over ten years) and an even larger positive cash flow effect for businesses in 2020 (over $700 billion), because some measures are effectively loans. However, the measures are also relatively untargeted, i.e., they are not restricted to the industries or firms most significantly impacted by the pandemic. Because of this, we expect that they are unlikely to reduce substantially the number of firms facing illiquidity or insolvency, and as a result their aggregate effects on investment or employment could be relatively small.

Keywords: Financial positions; Covid-19; tax policy;

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Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Source: Federal Reserve Bank of Chicago

Publication Date: 2020-05-19