A group of 120 Democratic members of Congress is calling on their party’s leadership to ensure that a tax break for millionaires that Republicans quietly buried in an earlier coronavirus relief package is repealed in upcoming aid legislation, arguing the rollback would free up hundreds of billions in revenue which could be used to help struggling families.
Led by Reps. Lloyd Doggett (D-Texas), Rosa DeLauro (D-Conn.), Steve Cohen (D-Tenn.) in the House and Sen. Sheldon Whitehouse (D-R.I.) in the Senate, the coalition of lawmakers sent a letter to Democratic leaders on Tuesday demanding the reversal of “costly tax breaks for so-called ‘net operating losses’ that Republicans tucked into the CARES Act,” a $2 trillion relief measure that former President Donald Trump signed into law last March.
“These special-interest giveaways will confer over 80 percent of the benefits to just 43,000 taxpayers, each earning at least $1 million per year,” reads the letter to Senate Majority Leader Chuck Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.). “We urge you to repeal these unwarranted tax cuts, as HEROES and HEROES 2.0 proposed and President Biden has recommended. This would save over $250 billion, which should be repurposed to help Americans who have lost income due to the pandemic and its economic fallout.”
“In addition to presenting immediate hardships, the Covid-19 pandemic has laid bare and magnified our nation’s troubling economic inequality,” the letter continues. “Relief must address this inequality, not exacerbate it. The CARES net operating loss provisions will further worsen economic inequality by providing an average tax break of $1.6 million to just 43,000 very high-income taxpayers. This is unacceptable, especially when compared to the limited relief most Americans have received.”
Republicans buried an obscene tax giveaway in the CARES Act that gave $250 billion to the 1% instead of $2000 to working families.
Proud to join @RepLloydDoggett & @RosaDelauro in leading a letter w/ 120 colleagues urging leadership to repeal the windfall.https://t.co/wPT1r7nn3f
— Steve Cohen (@RepCohen) February 2, 2021
As The Intercept’s Akela Lacy reported last April, Democrats on the Senate Finance Committee tried to cut the millionaire tax break from the CARES Act during the negotiation process but were ultimately unsuccessful. The panel’s Democrats then failed to alert their colleagues to the provision, which made its way into the final legislative package and into law.
“A spokesperson for Massachusetts Democratic Rep. Ayanna Pressley, a member of the House committees on financial services and oversight, said Republican Senate staffers added the provision at the last second to the final bill text, and that relevant leadership and committee staff did not have a heads-up,” Lacy reported. “California Rep. Ro Khanna, a member of the House committees on oversight and budget, said he found out about the provision after seeing reporting from the Washington Post.”
After a Joint Committee on Taxation analysis released shortly after the provision’s passage showed the tax cut would overwhelmingly benefit rich Americans — including wealthy hedge fund and real estate investors — Whitehouse said in a statement that “Congress should repeal this rotten, un-American giveaway and use the revenue to help workers battling through this crisis.”
Read the 120 Democrats’ full letter:
Dear Speaker Pelosi and Leader Schumer:
As we continue to debate allocating limited resources to stimulate the economy, we write to bring your attention to costly tax breaks for so-called “net operating losses” that Republicans tucked into the CARES Act. These special-interest giveaways will confer over 80 percent of the benefits to just 43,000 taxpayers, each earning at least $1 million per year. We urge you to repeal these unwarranted tax cuts, as HEROES and HEROES 2.0 proposed and President Biden has recommended. This would save over $250 billion, which should be repurposed to help Americans who have lost income due to the pandemic and its economic fallout.
According to Mark Zandi, chief economist of Moody’s Analytics, NOL tax breaks are the least effective way to stimulate the economy of over 20 policies reviewed, generating just 27 cents of GDP for every dollar of federal cost. What’s more, these ineffective giveaways benefit a narrow set of high-income taxpayers, including hedge funds, real estate developers, and likely the Trump family.
The Trump tax law placed temporary restrictions on NOL gimmicks in order to raise revenue for other tax cuts in the bill. These were among the few provisions of the Trump tax law that, standing alone, pushed the tax code in a progressive direction. We support restoring these limitations and making them permanent. Making them permanent alone could save the federal budget over $100 billion.
The repeal of NOL limitations in the CARES Act had little to do with pandemic relief and arbitrarily rewards business owners who lost money before the pandemic began. Making matters worse, unlike the small business relief provided through the Paycheck Protection Program, these windfalls come with no strings attached to ensure they support payroll or critical business operations.
In addition to presenting immediate hardships, the COVID-19 pandemic has laid bare and magnified our nation’s troubling economic inequality. Relief must address this inequality, not exacerbate it. The CARES net operating loss provisions will further worsen economic inequality by providing an average tax break of $1.6 million to just 43,000 very high-income taxpayers. This is unacceptable, especially when compared to the limited relief most Americans have received.
We urge you to repeal the NOL giveaways by including sections 20301 and 20302 of the HEROES Act in the next COVID-19 relief legislation. Further, we ask that you repurpose these funds to provide relief for families struggling though this challenging time.
Help us Prepare for Trump’s Day One
Trump is busy getting ready for Day One of his presidency – but so is Truthout.
Trump has made it no secret that he is planning a demolition-style attack on both specific communities and democracy as a whole, beginning on his first day in office. With over 25 executive orders and directives queued up for January 20, he’s promised to “launch the largest deportation program in American history,” roll back anti-discrimination protections for transgender students, and implement a “drill, drill, drill” approach to ramp up oil and gas extraction.
Organizations like Truthout are also being threatened by legislation like HR 9495, the “nonprofit killer bill” that would allow the Treasury Secretary to declare any nonprofit a “terrorist-supporting organization” and strip its tax-exempt status without due process. Progressive media like Truthout that has courageously focused on reporting on Israel’s genocide in Gaza are in the bill’s crosshairs.
As journalists, we have a responsibility to look at hard realities and communicate them to you. We hope that you, like us, can use this information to prepare for what’s to come.
And if you feel uncertain about what to do in the face of a second Trump administration, we invite you to be an indispensable part of Truthout’s preparations.
In addition to covering the widespread onslaught of draconian policy, we’re shoring up our resources for what might come next for progressive media: bad-faith lawsuits from far-right ghouls, legislation that seeks to strip us of our ability to receive tax-deductible donations, and further throttling of our reach on social media platforms owned by Trump’s sycophants.
We’re preparing right now for Trump’s Day One: building a brave coalition of movement media; reaching out to the activists, academics, and thinkers we trust to shine a light on the inner workings of authoritarianism; and planning to use journalism as a tool to equip movements to protect the people, lands, and principles most vulnerable to Trump’s destruction.
We urgently need your help to prepare. As you know, our December fundraiser is our most important of the year and will determine the scale of work we’ll be able to do in 2025. We’ve set two goals: to raise $115,000 in one-time donations and to add 1365 new monthly donors by midnight on December 31.
Today, we’re asking all of our readers to start a monthly donation or make a one-time donation – as a commitment to stand with us on day one of Trump’s presidency, and every day after that, as we produce journalism that combats authoritarianism, censorship, injustice, and misinformation. You’re an essential part of our future – please join the movement by making a tax-deductible donation today.
If you have the means to make a substantial gift, please dig deep during this critical time!
With gratitude and resolve,
Maya, Negin, Saima, and Ziggy