New “Explore America” $4000 Domestic Travel Credit Is A Terrible Idea

The Trump administration is reportedly considering a domestic travel “Explore America” tax credit that would refund 50% of up to $8000 per household in air, hotel, rental cars and even event tickets and restaurant spend as long as you’re at least 50 miles away from home.

I would love for other people to cover $4000 of my travel expenses. However I don’t think this is a good idea.

  1. Cost isn’t the barrier to travel. Subsidizing travel with tax credits makes travel cheaper, but price isn’t the binding constraint. When you start to see persistently lower fares that’s good for the airline industry because it means people can be brought back to travel, fear and risk aren’t overwhelming demand. Right now people are staying away because of the virus, not because of price.

  2. Proposal subsidizes demand next year after risk is no longer as big an issue. The ‘Explore America’ tax credit proposal would last through the end of 2021. We’re likely both to have effective treatments and even a vaccine by then. Hospitals won’t be overrun, patient outcomes will improve, and outbreaks should be limited and localized. If travel needs help recovering, shouldn’t we wait to see what demand looks like at that time and what’s holding it back, rather than passing a proposal now before we have a sense of the forces we’re even trying to combat (if any)?

  3. Should we be encouraging a return to normal behavior? Travel is lagging even though people aren’t generally required to stay home. People are making a judgment about risk that has helped to contain spread of the virus. People stopped going to restaurants before governments required them to. The NBA cancelled its season before gatherings were barred. And people continue to stay home because they aren’t confident it’s advisable to go out. That may be wise especially for older people as well as those with significant pre-existing conditions like diabetes.

With historic rates of unemployment, food spending closer to home may be a higher priority. Paying rent on your existing home may be a higher priority than paying rent on a hotel room. And if travel right now is the province largely of those who are better off, in an economy that features greater levels of inequality due to the recession and job losses, redistributing money to those who are better off seems ill-advised and ill-timed. To benefit from this credit you need the $8000 to spend in order to get $4000 back.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I love to travel, I am not going anywhere, anytime soon. Not even if it was free and I have several million points so it effectively would be free.

  2. I love the idea and would take advantage of it after being vaccinated. Win-win situation for me, big Fail for the taxpayer. Oooops, almost forgot–the taxpayer is me

  3. There have been no shortage of stupid proposals from both the left and right to hand out more money in a wide variety of ways. All of these neglect the simple fact that WE DON’T HAVE ANY MORE MONEY. Although it is nice to imagine that we can just run $Trillion+ deficits forever with no consequences that simply isn’t the case.

  4. @Jose – I think I offer a reasonable and thought-through explanation of concerns I have over a policy proposal reportedly under consideraton. Is there anything I’ve laid out that you think I have mistaken?

    I don’t happen to believe that the President has any sort of a monopoly on bad policy proposals. Those that are supposedly under active consideration by the administration warrant greater scrutiny because they’re more ‘real’. That’s what comes with being President, for both better and worse.

  5. If you squint and try to see this as a way to prop up people working in the tourism industry maybe it makes a little sense. But yeah,just skip the middle man (me) and give them the money.

  6. I don’t know about this case, but crazy government spending is usually justified on the basis of the mysterious “multiplier effect” by which $1 of government spending generates say $2 of economic activity.

    Unfortunately, however, $1.99 of that “economic activity” is the effort individuals and companies expend scrambling to scoop up all the free money.

  7. Bad idea or not, I would prefer individual travel tax credit over another airline or hotel bailout.

  8. A tax credit is a dumb idea which provides weird incentives. Multiplier effects are real, and this makes sense from that perspective, but should we be incentivizing travel specifically? That said if Trump does waste money on this, I’ll happily take advantage after I am vaccinated next year.

  9. I’m already traveling, with Flagstaff Arizona coming up next week. To say “cost isn’t a barrier to travel” is not correct, as cost is a barrier to everything. I drive a Nissan, not a Mercedes for that reason. I would be traveling to Colombia now, but their border is closed until 1 September. Guess where I am going on the 7th of September? The travel industry is in a world of hurt and that will linger a year or two into the future, it will not go away anytime soon. A large part of the unemployed people you mention are from the travel industry. I am doing my part getting them back to work, I’m not shaking in my boots hiding at home with two years worth of toilet paper.
    The virus will fizzle away at some point just like the Spanish Flu did. Things were totally back to normal after that major pandemic within a few years.

  10. I’ll take the money. Better not be any b.s. phase outs for people deemed to be higher income, like the earlier giveaway that I paid for, but did not receive.

  11. @Doug, of course we have the money. Jumpin Jerome just printed $3Trillion, what’s another $10 Trillion? After all it comes from thin air (he even admitted that on 60 Minutes!), and it will forever be this way. JJ even gave free money to the God forsaken hedge funds!! so what’s a measly $4K rebate to the joe smoe traveler? Bring it on! I’m going to blow my $8K on Kauai, Maui, Big Island. Thank You Jumpin Jerome!

  12. @Jose – instead of your pedantic “orange man bad” posts, which are boring at this point, maybe tell us 3 things you like about the racist in chief for a change

  13. Fix the health issue and the economy will heal itself. But instead of fighting the war on COVID they’ve surrendered and lost, and COVID is regaining ground.

    Another chaotic response from this administration about cosmetic stuff that doesn’t matter. Get the frigging virus under control, you Washington covidiots!

  14. Why can’t journalists just print news? For example, the first part should be “Explore America offers travel credit” which is “news” while “it’s a terrible idea” is opinion. This just reinforces a biased liberal media.

    Perhaps bloggers aren’t journalists.

  15. i will be voting for President Trump in november no matter what.
    and hopefully, after the election, we would abolish the 22nd amendment so i can vote for him again 4 years later.
    no joke.
    so deal with it.

  16. “To benefit from this credit you need the $8000 to spend in order to get $4000 back.” Not only do you need to spend $8,000, but you aren’t getting that $4,000 back until you file your tax return. This is just another giveaway for the well off. Seriously before all this didn’t like 47% of people not even have federal tax liability? What do you think that number is going to be with massive unemployment? Also with the massive unemployment as well as underemployment when things start up again how many people can afford to drop $8,000 on a vacation? At a time when schools and public services are lacking funding THIS is what is being talked about re: our tax dollars?

  17. @Randy Scheffer – this is obviously an opinion piece, as you can see from the headline. Do you have any particular reason you think my opinion is wrong?

  18. This is so stupid. People are struggling. Already live check to check. I am essential worker. Have been working and struggling. $2/hr extra hazard pay which is now over was a joke. I had to risk my life while others sat at home and got almost all their pay ,plus $600/wk extra. While our little $80/wk if you work 40 hrs full time was taxed at 25%. BS IF YOU ASK ME! essential workers got the shaft. And they are proposing bk to work incentives. Again BS. IF YOUR SO EAGER TO GO BK TO WORK GO BK AT YOUR REGULAR WAGES. WE NEED MORE MONEY IN OUR POCKETS NOT STUPID TAX CREDITS THAT DONT HELP PPL WHO ALREADY CANT AFFORD TO TRAVEL. THESE PPL RUNNING OUR COUNTRY ARE A FUCKING JOKE!!! I AM BEYOND PISSED AND FEEL VERY UNAPPRECIATED FOR ALL EXTRA WORK AND RISK I’VE BEEN TAKING.

  19. Ps not to mention that some people don’t have vacation time accrued if they have just started a new job. “ here’s your sign folks”

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