Obviously the tourism industry is struggling right now, and that puts hundreds of millions of jobs globally at risk. That’s a big problem, but is there a solution? Well, the Trump Administration is reportedly considering at least one option to boost domestic travel.
“Explore America” $4,000 tax credit for travel
The Trump Administration has apparently floated the concept of an “Explore America” tax credit, which Americans could use for domestic travel. Here’s how this could work:
- This credit would be capped at $4,000 per household
- This credit would apply for travel expenses through the end of 2021
- This credit could be worth up to 50% of a household’s spending on expenses like airfare, hotels, rental cars, attraction tickets, and restaurant dining, when at least 50 miles away from home
This concept was first brought up during a roundtable with restaurant executives back in May. President Trump hasn’t said much publicly about this concept since, though the U.S. Travel Association is now lobbying Congress and the Trump Administration for this to come to fruition.
The lobbying group argues that this is modeled after the tax credit that was available for first time home buyers between 2007 and 2009.
Could a travel tax credit be a good idea?
I can see arguments for and against this concept.
There’s a lot working against this concept:
- Ultimately this tax credit will be coming out of taxpayers’ pockets, so is this really how taxpayers’ money should be spend at this point?
- Is it reckless to directly incentivize Americans to travel, especially as coronavirus cases are on the rise in about 40% of states? I’m on my first trip in months and am not sure I want to travel again anytime soon (more on that later), but is creating a direct incentive like this a smart idea?
But there is also some merit to this concept, or at least it’s not completely negative:
- Is this a better concept than just outright giving airlines and hotels another bailout worth tens of billions of dollars, which gets taxpayers (other than airline employees) virtually nothing?
- The future of jobs in tourism is a very real concern, as millions of Americans rely on these jobs to make a living, and if they don’t recover eventually, a lot of businesses may have no choice but to shut down.
- I would assume there’s some multiplier effect here, given the economic cost of airlines, hotels, and other tourist attractions shutting down.
It doesn’t sound like the “Explore America” tax credit is anywhere close to being finalized, but it’s an interesting concept.
I do think it’s too early to directly incentivize people to travel in this way, though as such this does seem like a better concept than another travel industry bailout worth tens of billions of dollars. Maybe something like this could make sense if or when things stabilize a bit more otherwise?
It certainly seems like a better idea than Trump suggesting the government would buy years of bulk discounted airline tickets.
What do you make of this concept?
(Tip of the hat to View from the Wing)