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A Tale of Two Wage Subsidies: The American and Australian Fiscal Responses to COVID-19

Steven Hamilton

Abstract:

In July 2020, COVID-19 had been suppressed in Australia but continued to spread across the United States. Both countries instituted lock-downs and fiscal support, but Australia experienced a milder recession, highlighting the role of public health measures in protecting the economy. Cash stimulus is less useful than in a normal recession, justifying wage subsidies encouraging businesses to retain workers. The Australian wage subsidy, delivered via the tax authority, was better targeted, more generous, more accessible, but slower than the American wage subsidy delivered via banks. The experience highlights the need for investments in IRS infrastructure to better prepare for future crises.

Citation

Steven Hamilton (2020), A Tale of Two Wage Subsidies: The American and Australian Fiscal Responses to COVID-19 , National Tax Journal, 73:3, pp. 829-846

DOI: dx.doi.org/10.17310/ntj.2020.3.09