Democrats say the GOP tried to "loot American taxpayers" to "reward ultra-rich beneficiaries" like "Trump’s household "
April 16, 2020 1:55PM (UTC)
Republican lawmakers employed the coronavirus relief invoice to provide millionaires a tax break that they failed to include in the 2017 tax cut bill.
The 2017 Republican tax cut imposed limitations on how much owners of "pass-through" businesses, or companies where the owner pays a single income tax on gains rather than the corporate income taxation, can deduct against non-business income, such as capital gains. The bill set a $250,000 cap on losses which can be deducted.
But right-wing think tanks and some lawmakers complained about the cap, and Senate Republicans snuck a provision into the coronavirus relief bill last month to suspend the limits, The Washington Post reports.
The Joint Committee on Taxation (JCT), a nonpartisan tax agency, estimates that over 80% of the advantages of the tax change will benefit those who earn greater than $1 million per year.
The suspension is expected to cost approximately $90 billion this year alone and is a portion of a bigger set of taxation changes expected to include $170 billion to the national deficit over the next ten years, according to the JCT.
Overall, about 82 percent of the benefits goes to only about 43,000 taxpayers. Less than 3 percent of the benefits will flow to those who earn under $100,000 per year. The bill also allows business owners to apply the tax changes retroactively to their own consumer alert 2018 and 2019 losses.
Steve Rosenthal, a tax expert at the nonpartisan think tank that the Tax Policy Center, told The Post that hedge fund investors and property businesses will probably be "far and away" the key beneficiaries of this change.
Sen. Sheldon Whitehouse, D-R.I., who asked the JCT analysis, accused Republicans of trying to funnel taxpayer money to millionaires amid a public health crisis.
"It’s a scandal for Republicans to loot American taxpayers in the midst of an economic and human catastrophe," he explained in a statement. "This analysis shows that while Democrats fought for unemployment insurance and small business aid, a top priority of President Trump and his allies in Congress was yet another massive tax cut to the wealthy. Congress should repeal this rotten, un-American giveaway and apply the revenue to assist employees battling through this crisis. "
Rep. Lloyd Doggett, D-Tex., said the tax break dwarfed the funding necessary for critical coronavirus reaction attempts.
"For those earning $1 million annually, a tax break buried in the current coronavirus relief law is so generous that its total price is greater than total new funding for all hospitals in America and over the total provided to all state and local governments," he explained. "Someone wrongly captured on this health crisis to benefit ultra-rich beneficiaries, probably including the Trump household, using a tax loophole not available to middle class families. This net operating loss loophole is a failure which needs to be repealed. "
Republicans argued there wasn’t any issue with the provision since the bill which also included over $2 trillion in aid to individuals, businesses and hospitals — has been passed on an overwhelmingly bipartisan basis.
A spokesman for Senate Finance Chairman Chuck Grassley, R-Iowa, told The Post that the invoice "helps businesses keep the lights on and employees on payroll as far as possible to make it through this crisis. Every senator criticizing this provision voted for this bipartisan bill, so their complaints regarding a law they helped write only stink of politics. "
However, the Post noted that Republicans used the "must-pass law " to "create tax changes that they had hunted for many years," such as a payroll tax holiday and tax incentives for companies to retain their employees.
Whitehouse slammed Republicans on Twitter for utilizing the invoice to include "completely unrelated $195 billion dollar tax giveaway, almost all for millionaires and billionaires. "
Conservatives claimed that the tax change could assist the coronavirus relief efforts.
"The tax relief provides businesses badly needed liquidity throughout the coronavirus pandemic while at the same time reducing the tax penalty on insecure business investments," Alan Viard of the right-wing American Enterprise Institute wrote.
But Democrats argued that the cash would be spent to help people that aren’t millionaires.
"We should be assigning the needs of working-class Americans — perhaps not millionaires. "
His work has also appeared in the Los Angeles Times, Chicago Tribune, Boston Herald and Baltimore Sun.