Warren Joins 119 Democrats in Bicameral Call for Repeal of GOP Tax Giveaway in Next COVID Relief Package
Members Advocate Relief for Struggling Families, not Hedge Fund Managers and Real Estate Speculators
Washington, DC – Today, Senator Elizabeth Warren (D-Mass.) joined Senator Sheldon Whitehouse (D-R.I.), Representative Lloyd Doggett (D-Texas), Senator Sherrod Brown (D-Ohio), Representative Rosa DeLauro (D-Conn.), and Representative Steve Cohen (D-Tenn.), along with a group of 114 Democratic members of Congress, to urge House and Senate leadership to repeal a massive tax giveaway for a small number of extremely wealthy taxpayers that Republicans slipped into must-pass pandemic-relief legislation last year. The members call for funds to flow to Americans fighting to make ends meet in the midst of the COVID-19 crisis, not rich real estate investors and hedge fund managers. To unwind the tax giveaway and redistribute its benefits to working Americans, the members reintroduced the CARES Windfall for the Wealthiest Repeal Act, which passed the House of Representatives twice last year as part of the Heroes Act and Heroes 2.0 but was blocked in the Republican-controlled Senate.
These tax breaks for so-called “net operating losses” in the Coronavirus Aid, Relief, and Economic Security (CARES) Act were estimated by the nonpartisan Joint Committee on Taxation (JCT) to cost more than the assistance to hospitals included in that legislation and to overwhelmingly benefit a narrow set of wealthy taxpayers.
“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,” wrote the lawmakers.
Further, the lawmakers stated, “According to Mark Zandi, chief economist of Moody’s Analytics, [net operating losses] 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….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.”
The lawmakers closed their letter by recommending the millions saved by ending the giveaway go toward relief for Americans suffering from the pandemic.
The CARES Windfall for the Wealthiest Repeal Act would:
Repeal Section 2304 of the CARES Act, which removed a limit that prevented wealthy owners of pass-through businesses from using active business losses to offset nonbusiness income in excess of $500,000, such as capital gains income. This legislation would reinstate this limit on a permanent basis, which only applies to the narrow slice of the top 1%, particularly hedge funds and real estate developers.
Limit the ability to carryback losses to businesses experiencing losses during the pandemic by:
Allowing only losses from 2020 and 2019, to be carried back to offset tax paid in prior tax years. Businesses that experienced losses multiple years prior to the pandemic when the economy was growing should not be advantaged over businesses coping with losses stemming from the pandemic.
Limit carrybacks of 2020 losses to two prior tax years. This provision will prevent tax arbitrage that would result from being able to get a refund on taxes paid at the higher corporate rate prior to enactment of Republican tax law.
Senator Warren joined Senator Whitehouse and Congressman Doggett in April 2020 to unveil bicameral legislation to repeal Section 2304 of the CARES Act. Over the course of the pandemic, Senator Warren has advocated for federal relief that prioritizes families and workers and fought against tax giveaways to the wealthiest Americans. Senator Warren has proposed a wealth tax on households with fortunes of $50 million or more.
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