2019 was an exceptionally strong year for the U.S. economy — the Dow Jones consistently hit record highs and unemployment rates dropped to a record low of just 2.1%. However, even a record-breaking year like that one could not prepare the American economy for the COVID-19 pandemic of 2020.
But the U.S. is not alone in this dire situation— unusual circumstances brought about by the coronavirus have impacted economic growth around the world. In this article, we look at how the global market has changed over the last several months and what certain countries are doing to stimulate their economies through massive government programs.
Governments around the world are acting decisively to protect their businesses and people from the economic disruption being caused by the COVID-19 virus pandemic. Whether through tax cuts, investment incentives, or changes to filing deadlines, tax systems will play a particularly significant role in helping to alleviate the financial and economic turmoil that is now occurring.
- The United States has implemented a $2 trillion stimulus package, the largest in the country’s history.
- Australia has guaranteed struggling businesses A$1,500 every two weeks per employee.
- The European Central Bank will spend over 1 trillion euros on Eurozone bonds over the next nine months.
- Canada has guaranteed C$2,000 a month to individuals affected by the coronavirus outbreak.
The Five G20 Countries with the Largest Coronavirus Stimulus Programs
- United States: $2.3 trillion (11% of GDP)
- Germany: $189.3 billion (4.9% of GDP)
- China: $169.7 billion (1.2% of GDP)
- Canada: $145.4 billion (8.4% of GDP)
- Australia: $133.5 billion (9.7% of GDP)
In the United States, President Trump announced that the $2 trillion American relief package was “twice as large” as any prior program. This program provided $1,200 to qualifying Americans to cover costs incurred by the pandemic and subsequent economic slowdown. However, there are significant logistical challenges, including the reality that taxpayers who haven’t set up their IRS direct deposit may not receive their check for months.
The Australian government has made a commitment to provide wage subsidies of A$1,500 every two weeks per employee.
Canada has also guaranteed a direct payment option to its citizens, which is equal to $2,000 every four weeks for up to 16 weeks for all workers affected by the pandemic. The program is part of Canada’s C$52 billion ($36.62 billion) program, which was doubled from an initial C$27 billion program.
Germany and other European countries were also quick to pass their own economic stimulus programs, including a promise from the European Central Bank (ECB) to spend over 1 trillion euros on Eurozone bonds over the next nine months. If you need help navigating the complicated world of stimulus packages and taxes, please contact a representative at Milikowsky Tax Law today!
If your organization is looking to reduce overall tax costs, control information technology expenses, and redirect internal resources to more strategic activities, co-sourcing to a third party might be the right decision for your team. Utilizing a third party, like Milikowsky Tax Law, will also give your organization the ability to leverage our considerable and ongoing investments in the necessary talent and technology to keep pace with an ever-changing world. Contact us today to learn more!