Sen. McSally hopes tax credit would help US travel industry

Dawn O’Callahan would love to have a $4,000 tax credit to go on vacation and lounge around at a beach home in San Diego or jump in the car to visit relatives in Colorado.

Her vacation dreams are usually interrupted by the reality of her monthly mortgage, her husband’s fixed income, utility bills, and helping out her daughter, a single mom.

With Arizona and the rest of the nation gripped by the COVID-19 crisis, she deems those dreams as delusional and counter to sound medical advice.

Like millions of Americans, the Republican accountant has been holed up with her family in their Mesa home since February, keeping up with the daily death count and preparing for more economic hardship she feels is sure to come.

“We refinanced our home and have some equity, so we’re able to breathe through all of this, but I’m not wasting one penny on anything frivolous at this point,” O’Callahan, 63, said.

“And we don’t know what’s coming our way. I mean, it’s laughable. I would love to go on a vacation but there’s so many people struggling right now.”

The $4,000 tax credit proposed this week by Sen. Martha McSally, R-Ariz., is intended to encourage people such as O’Callahan, who have disposable income, to kick-start the economic-battered tourism industry.

But the idea has been ridiculed by some for subsidizing vacations for the wealthy while declining to say what should happen after the federal government's enhanced unemployment payments stop at the end of July. The bill comes as the state's worrisome surge in cases prompted New York, Connecticut and New Jersey to impose two-week quarantines for travelers from hotspots like Arizona in an effort to curb the spread of the virus.

On Thursday, Arizona's case count surpassed 60,000 with 1,490 known deaths.

McSally's legislation, known as the American Tax Rebate and Incentive Program Act, or the American TRIP Act, would give individuals a tax credit of up to $4,000 each.

The amount is doubled to $8,000 for joint filers. Children would be eligible for a $500 credit for travel between Dec. 31, 2019, and Jan. 1, 2022.

The credit would apply to all travel within the U.S. and its territories, as long as the travel 50 miles or beyond individuals’ primary residence.

The credit would cover expenses like lodging, transportation, and entertainment.

Those who have second homes could write off the costs of food and beverages, travel and entertainment, a provision that heightened criticism that the bill would benefit the wealthy over everyday Arizonans who are struggling to pay rent and basic bills.

But McSally, who faces election this year against Democrat Mark Kelly, a retired NASA astronaut, said the measure would speed the travel industry's recovery.

Travel and tourism account for more than $3 billion in tax receipts in Arizona. The industry employs more than 180,000 in the state and 9 million nationally.

“If Americans aren’t traveling, then millions of other Americans have no job to go back to,” McSally said in a written statement Thursday to The Arizona Republic.

“That means millions of Americans are unable to provide for their families, including paying rent or a mortgage, health care costs, or buying groceries," she said. "My bill allows Americans to keep more of their hard earned money and use it into next year to visit grandma and grandpa, take a trip to the Grand Canyon, and so much more, when it is safe to do so.”

A McSally spokeswoman said McSally’s proposal could be included in Congress’ next economic relief package.

And on Thursday, Larry Kudlow, the White House’s top economic adviser, told Fox Business that McSally's bill “is going to be a very strong positive” towards the nation’s economic rebound.

McSally’s measure came after Trump invoked support for a similar idea, one that was supported by the U.S. Travel Association. And tourism officials in

Phoenix and Tucson praised McSally’s legislation, which would also provide $50 million to help Destination Marketing Organizations across the nation promote travel and tourism.

Brent DeRaad, the president and CEO of Visit Tucson, which provides destination marketing for Pima County, Tucson and the town of Oro Valley, said hotel occupancy in metro Tucson plummeted from 83% in February to 49% in March and down to 24% in April. It ticked up a bit in May to about 33% , he said.

“Sen. McSally’s legislation is certainly welcome,” DeRaad said. “We’ve had estimates as high as 50% of travel industry workers throughout the United States being out of work. As hotels reopen, that’s slowly starting to turn back around.”

Dennis Hoffman, an Arizona State University economics professor, said the tax credit won’t persuade those who feel unsafe to travel.

But given the measure’s extended time frame through Jan. 1, 2022, he sees merit in the concept.

“Anything that can be done at the state level, at the federal level, to encourage people, when they feel comfortable to travel and to enjoy the sites, especially what a state like Arizona has to offer, I think it should be considered as part of any federal aid package,” he said.

“... I’m big on initiatives at the federal level that can target areas that have clearly been disadvantaged by the virus and this would be one. Tourism has been devastated.”

McSally introduced the bill on the eve of President Donald Trump’s return to Arizona this week, as the state was hit by record levels of coronavirus cases and hospitalizations. Critics panned the measure as favoring the wealthy, adding to the national deficit, and siding with corporate industry groups over those who need direct financial assistance.

Meghan McCain, the daughter of the late Sen. John McCain who long held the seat McSally was eventually appointed to after his death, heaped criticism on McSally on Twitter after news broke of the bill.

McCain, a co-host of ABC’s “The View,” predicted McSally would lose her 2020 race on the heels of her 2018 race.

“It’s a joke, an embarrassment and now Arizona is going to be a blue state,” McCain wrote. “Congratulations McSally — did it in under 2 years after lifetimes of being a red state.”

McSally's campaign did not weigh in on McCain's remark.

Kelly’s campaign slammed the legislation and said McSally should be doing more to get direct relief to individuals and cut down wait times for coronavirus tests.

Wait times are as long as 13 hours. “Arizonans need a Senator who will have their backs during this pandemic with a plan that helps people get the health care and testing they need, and make ends meet,” Kelly’s spokesman Jacob Peters said in a written statement. “Prioritizing taxpayer-funded vacations for wealthy Americans at this moment is irresponsible policy and desperate politics."

Pearl Dowe, a professor of political science and African American studies at Emory University, said the legislation may help McSally politically — particularly with many Republican and independent suburban voters whose support she lost in 2018.

“She’s attempting to speak to affluent people who would likely spend a significant amount of money on vacations in a normal climate,” she said.

“But it leaves behind a significant group of people … low-income people, those who may sustain a significant level of unemployment and those who are conscious of what is happening with COVID-19 that are reluctant to travel. I don’t think that a tax break would encourage people to travel when they’re concerned about their health.”

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