Coronavirus stimulus law has a tax change just for millionaires, report says
The new coronavirus stimulus passed by Congress includes a temporary tax change for people who make at least $1 million a year, according to an analysis from the Joint Committee on Taxation.
The analysis of the change shows 43,000 taxpayers in the highest income bracket, making more than $1 million a year, could save a combined $70 billion in taxes. Almost all benefits from the tax break go to people making more than $100,000 a year.
Rhode Island Sen. Sheldon Whitehouse and Texas Rep. Lloyd Doggett, both Democrats, requested the analysis from the congressional committee.
The change in tax law suspends limits on how much money individuals can deduct against how much they owe based on lost income or business revenue, according to the committee.
What does the temporary tax cut do?
“Based on to the JCT analysis, millionaire tax filers benefiting from one of the Republican provisions will see an average windfall of $1.6 million this year alone. That windfall dwarfs the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s $1,200 benefit for working families,” according to the statement from the Democratic senators.
The analysis of the short-term tax loophole found that is could cost taxpayers $86 million over the rest of this year. It suspends limits on excess business losses for individual taxpayers for 2018, 2019 and 2020, meaning people can deduct more from their income taxes.
“The revenue estimates assumes that business losses of individuals will be much higher in 2020 than would have been assumed at the start of this year,” the committee analysis states in a letter to Whitehouse and Doggett.
“There is, of course, a great deal of uncertainty about the economic effects of the COVID-19 pandemic, and how those economic effects will translate into business losses for individuals,” the analysis states.
Stimulus politics
Despite passing with bipartisan support, the CARES Act debate came with its fair share of political rancor, and that debate continues as people continue to process what’s in the trillions of dollars worth of economic stimulus.
“It’s a scandal for Republicans to loot American taxpayers in the midst of an economic and human tragedy,” Whitehouse said in a statement.
“This analysis shows that while Democrats fought for unemployment insurance and small business relief, a top priority of President Trump and his allies in Congress was another massive tax cut for the wealthy. Congress should repeal this rotten, un-American giveaway and use the revenue to help workers battling through this crisis,” he said.
Responding to the criticism, Michael Zona, communications director for Iowa Republican Sen. Chuck Grassley, said in an email to McClatchy News, “The CARES Act helps businesses keep the lights on and employees on payroll as much as possible to get through this crisis. Every Member of Congress criticizing this provision voted for this bipartisan bill, so their complaints about a law they helped write simply stink of partisan politics.”
Grassley chairs the Senate Finance Committee and the Joint Committee on Taxation.
The Coronavirus Aid, Relief, and Economic Security Act, called the CARES Act, includes trillions of dollars in stimulus to help the economy through the COVID-19 pandemic.
“For those earning $1 million annually, a tax break buried in the recent coronavirus relief legislation is so generous that its total cost is more than total new funding for all hospitals in America and more than the total provided to all state and local governments,” said Doggett.
“Someone wrongly seized on this health emergency to reward ultrarich beneficiaries, likely including the Trump family, with a tax loophole not available to middle class families. This net operating loss loophole is a loser that should be repealed,” the Texas Democrat said.
In a letter to the Trump administration dated April 9, Whitehouse and Doggett asked for “communications that may shed light on the origins of the Republican provisions.”
This story was originally published April 15, 2020 at 3:03 PM with the headline "Coronavirus stimulus law has a tax change just for millionaires, report says."
