Washington, DC – Senator Sheldon Whitehouse (D-RI) and Congressman Lloyd Doggett (D-TX) unveiled bicameral legislation today 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 $160 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.
“Tax giveaways for a wealthy few shouldn’t have come near a coronavirus relief bill. Relief legislation ought to address the needs of small businesses and workers, not fleece taxpayers to benefit real estate moguls and hedge fund billionaires,” said Whitehouse. “By repealing these special interest giveaways, we can free up billions of dollars for federal assistance our communities and economy so desperately need.”
“While American families anxiously await modest relief checks, the richest slice of the 1% have already been cared for by Senate Republicans in the CARES Act—at about $1.6 million each. The ultrarich can claim paper losses during boom times before the pandemic even began,” said Doggett. “This provision isn’t about coronavirus, working families or small businesses struggling to stay afloat. It is just more insider politics to get millions to those who have millions, especially real estate investors and hedge fund managers. Repealing this giveaway will free resources needed to help those truly in need.”
Joining Whitehouse and Doggett to unveil the bill were Senator Sherrod Brown (D-OH) and Representatives Rosa DeLauro (D-CT), Jamie Raskin (D-MD), and Steve Cohen (D-TN).
“Sadly, I am not surprised that Senate Republicans would find a way to give another handout to the richest of the rich in a package that is supposed to help the people who are truly suffering through the worst public health crisis we’ve seen in our lifetime,” Senator Brown said. “Workers are struggling to figure out how to pay their bills, stay in their homes, and keep their families safe while Republicans are looking out for their wealthy friends. We must right that wrong.”
“I’m proud to introduce this legislation with Rep. Doggett and Sen. Whitehouse to repeal the GOP’s obscene special interest provisions in the CARES Act dealing new tax breaks to million-dollar plus earners,” said Congressman Raskin. “It is indecent to pass out hundreds of millions of dollars in the middle of this nightmare to super-rich Americans as tens of millions of our people lose their jobs and are trying to figure out how to pay for their next meal. Economic aid should go to those who have the most need, not the most greed.”
“Across our country, we are seeing inspiring stories as we deal with the biggest economic and health crisis our nation has ever seen,” said Congresswoman DeLauro. “Nurses and doctors are in intensive care units trying to save our humanity. Famers, transportation workers, and grocery store clerks are toiling around the clock to feed our families. Credit unions and banks are delaying mortgage payments and forbearances. Now is the time for shared sacrifice—not massive, retroactive tax breaks going back to 2018 and 2019 for the wealthiest in our country. Repealing this $170 billion tax break would easily fund tens of thousands of loans for small businesses in Connecticut and across the country. I urge my colleagues on both sides of the aisle to stand with us.”
“It’s unseemly, obscene and immoral for Senate Republicans to want to give an average of $1.6 million in tax breaks to the richest individuals, 80 percent of whom make more than $1 million a year, while providing just $1,200 in relief to people who need it to buy groceries and medicine,” said Congressman Cohen. “It is estimated this carve out will cost us $90 billion in the first year. This provision must be repealed.”
Joining Whitehouse and Brown on the bill in the Senate are 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), Edward J. Markey (D-MA), 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), Kirsten Gillibrand (D-NY), and Cory Booker (D-NJ). Joining Doggett in the House are nearly 40 cosponsors.
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 requested by Whitehouse and Doggett on April 9, 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.
Whitehouse and Doggett’s 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.
Earlier this month, Whitehouse and Doggett sent a letter to senior Trump administration officials requesting communications that may shed light on the origins of the Republican provisions. 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 175 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.
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