Stimulus Update: The government proposed a $100 a month gas stimulus payment

A stimulus check of $100 is set to go out to citizens to help bear the burden of increased gas prices.

The national average for a gallon of gas is about $4. This is a major hurdle, an unpleasant cost to bear until prices fall again.

Some are finding it difficult to commute to work and do their daily errands due to record-high petrol prices. And it is here that the Gas Rebate Act of 2022 comes into play.

The recommendations come as gas prices have risen across the country in the aftermath of Russia's invasion of Ukraine, despite the fact that prices at the pump had already begun to rise before the conflict.

Reps. Mike Thompson, John Larson, and Lauren Underwood introduced the Gas Rebate Act of 2022 in Congress, which would pay $100 into Americans' bank accounts each time the national average price for a gallon of gas exceeds $4.

Some Democrats in Washington have made recommendations as well.

U.S. Representative Ro Khanna of California and Senator Sheldon Whitehouse of Rhode Island have proposed boosting taxes on big oil firms and giving single filers and joint filers rebates of about $240 and $360 per year, respectively.

According to a statement from the two, the Big Oil Windfall Profits Tax would levy a per-barrel tax equivalent to 50 percent of the difference between the current price of a barrel of oil and its pre-pandemic average price from 2015 to 2019.

The two lawmakers estimated that assuming the price of a barrel of oil stays at $120, the tax will raise $45 billion each year, giving single filers $240 and joint filers $360.

Khana said, “As Russia's invasion of Ukraine sends gas prices soaring, fossil fuel companies are raking in record profits. These companies have made billions and used the profits to enrich their own shareholders while average Americans are hurting at the pump”

Rep. Peter DeFazio, a Democrat from Oregon, has submitted a proposal that would tax oil firms and provide customers rebates. Because the idea is predicated on taxing this year's profits from oil and gas firms, it's uncertain how much money Americans will get.

DeFazio said in a statement about the bill, called the “Stop Gas Price Gouging Tax and Rebate Act”, “My legislation would tax Big Oil's excess profits in 2022 and return the revenue back to Americans”

According to research released by the monitoring group Accountable.us, the top oil and gas companies generated a record $205 billion in profits in 2021.

According to a statement from Rep. Underwood, who introduced the bill with DeFazio, said big oil and gas companies would pay a one-time 50 percent tax on any adjusted taxable income in 2022 that is above 110 percent of their average adjusted taxable income between 2015 and 2019, or the years prior to the pandemic.

In California, Democratic Gov. Gavin Newsom has proposed handing out $400 debit cards to registered automobile owners. Up to two of such tax refund checks would be available to drivers.

Vehicle registration, not tax records, would be used to assess eligibility. According to Newsom's administration, this would make it easier to send the money to low-income non-tax filers or persons receiving Social Security disability benefits.

Whatever path a state takes, it appears that most, if not all, will eventually provide some limited assistance to help alleviate the increasing price shocks seen most acutely at gas pumps.

The national average for unleaded gasoline hit a high of $4.33 per gallon on March 11, and the consumer price index shows that gasoline prices increased by 6.6 percent in February 2022, up 38 percent from the previous year. The average household is likely to incur an additional $2,000 in costs this year as a result of increasing petrol prices alone, according to AAA.

Prices differ from country to country, with the Northeast and West experiencing the highest levels of inflation right now.

Lawmakers have been looking for innovative ways to assist customers to cope with the agony of rising prices due to record-high inflation.

Gas tax holidays are likely to be implemented in a number of states, including Maryland and Georgia. A bill has also been suggested to temporarily suspend the federal gas tax.

Temporarily suspending those taxes has been criticized by critics because they help fund road repair and may not result in significant savings for drivers.

According to Alex Muresianu, a federal policy analyst at the Tax Foundation, the suggested rebates would be preferable to a gas tax suspension because they would not increase demand for gas.

However, when consumer prices are high overall, it may not make sense to focus solely on drivers. “That matters for people who are lower income and don’t drive, too,” Muresianu said.

He said, “It doesn’t make sense when the economy is running very hot, unemployment is low and inflation is very high”

The stimulus checks would be $100 a month, plus $100 per eligible dependent, under the Washington Democrats' Gas Rebate Act of 2022 proposal.

Individuals earning $75,000 or less per year, as well as joint filers earning $150,000 or less, will be eligible for the gas stimulus payment. Additionally, dependents in these families would be entitled to a monthly payment of $100.

Individuals earning $75,000 to $80,000 per year and joint filers earning $150,000 to $160,000 per year would also be eligible for stimulus funding, though at a reduced rate. At $80,000 and $160,000, payments stop completely.

If certain maximum salary cutoffs look familiar, it's because they're the same ones that came with the first three stimulus payouts. Income will be assessed by the most recent tax return submitted, as with past payments.

Some states have already taken steps to address the problem of high gas costs by approving tax rebates, they are;

New Mexico

The New Mexico legislature approved a $500 refundable income tax credit for residents earning less than $150,000 per year. Single filers with a yearly income of less than $75,000 will be eligible for a $250 tax credit.

Georgia

Residents in Georgia who filed tax returns for the years 2020 and 2021 will receive a one-time tax credit as a result of Georgia House Bill 1302. Single filers will receive $250, heads of households will receive $375, and joint filers will receive $500.

Indiana

Indiana lawmakers have authorized a plan to deliver a $125 refund to residents who have filed their taxes for the year 2021. It's not much, but it acknowledges that some people will have trouble paying for gas.