April 27, 2020
BRUNSWICK, ME – Today, U.S. Senator Angus King (I-Maine) today announced that he has cosponsored legislation that would repeal a massive tax break for a small group of wealthy taxpayers that was 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 $195 billion over ten years, and that would overwhelmingly benefit wealthy taxpayers like hedge fund managers and real estate speculators. Together, the provisions are among the costliest parts of the CARES Act, despite having no real connection to battling coronavirus or its economic fallout.
“With unemployment skyrocketing, families facing extreme uncertainty, and small businesses, state governments, and hospitals across the country struggling to make it through a hard economic time, it defies comprehension that anyone would think the best use of taxpayer funds is to put more money back in the pockets of the richest Americans,” said Senator King. “In this crisis, we need to focus on getting taxpayer dollars to the people who need help the most – not the wealthiest few. We have the chance to replace these misguided provisions with legislation that will help more working Americans make ends meet in the face of the coronavirus fallout; let’s seize this opportunity and do what is right.”
The provisions in question – 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 to 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 provisions become clear. According to an analysis from the JCT, just 43,000 individual tax filers covered by one of the 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. These tax benefits from the 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.
This legislation would repeal these 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. 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 provisions has the support of nearly 150 organizations across the country. Click here for the support letter organized by Americans for Tax Fairness.