As Americans battled the human and economic devastation of COVID-19, Congress sent rapid relief out to families, our health sector, small businesses and our economy. The most recent relief bill, the CARES Act, enjoyed wide bipartisan support and will help if implemented effectively. But tucked into its 880 pages were Republican-inserted tax provisions. The more we’ve learned about their immense cost and the few that they benefit, the clearer it is that they have to go.
These costly tax breaks are an inside hit job. They allow certain investors — particularly real estate speculators and hedge fund managers — to cut their tax bills by shifting losses to prior tax years. Working families who have a bad year would surely love the same chance to use a previous loss to secure a tax refund, but they don’t get this special treatment.
The actual cost of these provisions
The result of the two provisions is stunning in its size: $195 billion taken from the public treasury. According to early analysis from Congress’s nonpartisan Joint Committee on Taxation on the costlier provision (worth nearly $170 billion), the beneficiaries are few: 43,000 million-dollar-plus income earners will reap over 80% of the windfall — coming in at an eye-popping average of $1.6 million each in 2020 alone. That’s 1,300 times what regular Americans are getting with their $1,200 checks going out under the CARES Act.
At $195 billion, these reverse-Robin Hood provisions are nearly twice the $100 billion Congress provided to American hospitals and far more than the $150 billion going to state and local governments already buckling under the weight of the crisis.
Here is another way to think of this massive giveaway: The money spent on these tax breaks would pay for hundreds of N95 masks for every person in America plus 1 million hospital-grade ventilators, eliminating the national shortage. Front-line responders across the country struggle desperately for personal protective equipment (PPE). This money could have surged PPE to the front lines, instead of sending millions to the highest income folks quarantined in their country estates.
Making matters worse, unlike the small business relief in the CARES Act, these tax breaks came with no strings attached. They have no requirement to continue paying employees or to provide sick leave. Even some passive investors with no employees could get the benefit.
The tax breaks obviously contribute nothing to battling the coronavirus; they also do little to aid workers and the economy. Large corporations were also authorized to convert losses from two years before the pandemic into immediate tax refunds. Businesses with losses when the economy was growing are rewarded for poor management or adverse market conditions that had absolutely nothing to do with the pandemic. As former Vice President Joe Biden correctly observed, the “tax cut overwhelmingly benefits the richest Americans and is unnecessary for addressing the current COVID-19 economic relief efforts.” If we are at war with the coronavirus — as President Trump often claims — this is war profiteering.
Taking advantage of a crisis
If you need more reason to be concerned, check out whom these provisions likely benefit. Based on the limited information we have, experts have observed that President Trump and his family likely stand to gain immensely from these tax cuts. We don’t know by how much exactly, since the president refuses to release his tax returns, but we do know that real estate businesses like theirs are among the largest beneficiaries of this loophole.
We all need to understand exactly how this massive tax giveaway got into the CARES Act. Look at this number: $195,000,000,000. It’s huge. The payoff to wealthy investors is enormous. When that much money goes out the door to such a small group of beneficiaries, the prospect of corruption and quid pro quo political paybacks is obvious. Big string-pulling donors may have seen this crisis as another way to recoup their political investments. That’s why we’ve asked the administration for a full explanation of its role in securing these tax breaks. We hope we will get real answers and that they will dispel any concern that this was done to benefit the president and his family. If this $195 billion tax giveaway was put in at the request of Republican senators, we need then to know by whom and why.
While we investigate, let’s reverse the damage. We are offering legislation to unwind this massive tax giveaway, to recover the lost revenues and to use them to combat the pandemic and help small businesses and those truly in need during this challenging time. Our bill will also send a message to whomever demanded this handout: enough. Stop it. Giant special interest tax breaks were not needed before and certainly have no place during a pandemic. Let’s focus on the health and economic carnage caused by coronavirus with assistance to small businesses, struggling families and patients, not those who already have the most.
Democrat Lloyd Doggett represents Texas’ 35th district. Democrat Sheldon Whitehouse is a senator for the state of Rhode Island. Follow them on Twitter: @RepLloydDoggett and @SenWhitehouse.
