WASHINGTON, D.C. – U.S. Senator Tammy Baldwin (D-WI) joined bicameral legislation to repeal a massive tax giveaway for a small group of wealthy taxpayers that Republicans included in the coronavirus relief bill. The legislation, led by Senator Sheldon Whitehouse (D-RI) and Congressman Lloyd Doggett (D-TX), 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.
“At a time when workers can’t pay their bills and small businesses need help, Republicans are handing out massive tax giveaways to the top 1% and wealthy few. We need to provide more relief to the hardworking Americans who are struggling to get by, not give huge tax breaks to wealthy corporate executives and hedge fund managers,” said Senator Baldwin. “This tax break should’ve never made its way into any coronavirus relief package. We must repeal it now and get more assistance to those who actually need it during this economic crisis.”
“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 Senator 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 Congressman 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 Baldwin and Whitehouse on the bill in the Senate are Senators Sherrod Brown (D-OH), 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.
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.
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.