April 24, 2020 - WASHINGTON, D.C. – U.S. Senator Kamala D. Harris (D-CA) on Friday joined Senator Sheldon Whitehouse (D-RI) and Representative Lloyd Doggett (D-TX) in unveiling legislation to repeal a massive tax giveaway for a small group of wealthy taxpayers that Republicans included in the coronavirus relief bill. The legislation would do away with provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that the nonpartisan Joint Committee on Taxation (JCT) estimates will reduce government revenue by $195 billion over ten years, and that would overwhelmingly benefit wealthy taxpayers like hedge fund managers and real estate speculators.
Together, the Republican provisions are among the costliest parts of the CARES Act, despite having no real connection to battling coronavirus or its economic fallout.
“It’s outrageous that Senate Republicans gave the richest individuals in our nation a tax break in COVID-19 relief bill,” said Senator Harris. “We need to be protecting the most vulnerable communities during this time– not giving away money to the rich. This is provision must be repealed immediately.”
Joining Harris and Whitehouse on the bill in the Senate is Senator Sherrod Brown (D-OH), along with Senators Tom Carper (D-DE), Patrick Leahy (D-VT), Bernie Sanders (I-VT), Tom Udall (D-NM), Richard Blumenthal (D-CT), Dick Durbin (D-IL), Jeff Markey (D-OR), Chris Van Hollen (D-MD), Angus King (I-ME), Elizabeth Warren (D-MA), Kamala Harris (D-CA), Amy Klobuchar (D-MN), Chris Coons (D-DE), Jack Reed (D-RI), Chris Murphy (D-CT), and Kirsten Gillibrand (D-NY).
Joining Doggett on the bill in the House are Representatives Rosa DeLauro (D-CT), Jamie Raskin (D-MD), and Steve Cohen (D-TN), along with nearly 40 other House members.
The Republican provisions—sections 2303 and 2304 of the CARES Act—allow wealthy taxpayers to use losses in certain years to avoid paying taxes in other years. Among other things, the changes allowed wealthy taxpayers to claim rich refund checks for the 2018 and 2019 tax years – before the coronavirus crisis hit. And unlike programs in the CARES Act that required employers use benefits to maintain payroll and support workers, sections 2303 and 2304 let wealthy taxpayers keep the benefits with no strings attached.
Only after the Senate had already voted on the CARES Act did the full cost of the Republican provisions become clear. According to an analysis from the JCT, just 43,000 individual tax filers covered by one of the Republican provisions would see their tax liability fall by a combined $70.3 billion in 2020. Nearly 82 percent of those who will benefit from that provision make $1 million or more, with 95 percent making over $200,000.
The tax benefits from the Republican provisions dwarf payments flowing to working Americans. Based on the JCT’s analysis, millionaire tax filers benefiting from one of the provisions will see an average benefit of $1.6 million this year alone. In contrast, direct payments to most Americans under the CARES Act are capped at $1,200.
The bill would repeal the Republican provisions and, in their place, add a provision designed to help small companies struggling to stay afloat. This provision would be available to companies with under $15 million in receipts that have not engaged in excessive executive compensation, dividends, or stock buybacks. Unlike the Republican provisions, the new provision would only apply to 2020 and would offer taxpayers advanced refunds of up to $100,000 now to give them cash when they need it.
According to reports, beneficiaries of the tax giveaways may include President Trump, his son-in-law Jared Kushner, and “real estate investors in President Trump’s inner circle.”
The effort to repeal the Republican provisions has the support of nearly 150 organizations across the country. Click here for the support letter organized by Americans for Tax Fairness.
Click here for expert analysis of these provisions recommending the approach taken by this legislation.
Source: Senator Kamala D. Harris