April 27, 2020

Udall Sponsors Bill to Repeal GOP Tax Giveaway to Ultra-wealthy in Coronavirus Relief Legislation

Legislation would unwind GOP changes in CARES Act that cost taxpayers $195 billion, more than was given to hospitals, state and local governments

Provisions allow a wealthy few – including large real estate and hedge fund investors  to receive an average benefit of $1.6 million – dwarfing COVID relief bill’s $1,200 payments for working Americans

SANTA FE, N.M.— U.S. Senator Tom Udall (D-N.M.) sponsored legislation to repeal a massive tax giveaway for a small group of ultra-wealthy taxpayers that Republicans 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. 

The nonpartisan Joint Committee on Taxation (JCT) calculates that the tax breaks for the ultra-wealthy will add $195 billion to the national debt over the next 10 years at the cost of taxpayers. The Republican tax breaks are some of the costliest provisions of the CARES Act, despite providing no relief to the vast majority of New Mexicans and Americans, but they are likely to benefit 43,000 individuals who earn over $1 million per year an average.  

“When a record number of New Mexicans have lost their jobs almost overnight—through no fault of their own—and millions of Americans face the strain of bills they suddenly can’t pay, large real estate and hedge fund investors shouldn’t be first in line for tax breaks and taxpayer-funded handouts,” Udall said. “But that’s what Senate Republicans have pushed for. Unfortunately, Republicans insisted on including retroactive tax breaks for their multi-millionaire and billionaire friends in the CARES Act. It’s simply wrong, and these provisions should be repealed. While we hear stories of heroic healthcare workers risking their own lives to save others and neighbors across the nation coming together to make sure no one in their community goes hungry, Congress must put working families first over tax breaks for the super wealthy.”

Udall sponsored the bill, authored by Senators Sheldon Whitehouse (D-R.I.) and Sherrod Brown (D-Ohio) and cosponsored by Senators Tom Carper (D-Del.), Patrick Leahy (D-Vt.), Bernie Sanders (I-Vt.), Richard Blumenthal (D-Conn.), Dick Durbin (D-Ill.), Jeff Markey (D-Ore.), Chris Van Hollen (D-Md.), Angus King (I-Maine), Elizabeth Warren (D-Mass.), Kamala Harris (D-Calif.), Amy Klobuchar (D-Minn.), Chris Coons (D-Del.), Jack Reed (D-R.I.), Chris Murphy (D-Conn.), and Kirsten Gillibrand (D-N.Y.).  

The Republican provisions—sections 2303 and 2304 of the CARES Act—would allow certain very wealthy taxpayers even greater leeway to use losses in certain years to avoid paying taxes in other years. Among other things, the changes particularly enabled large real estate holders and hedge fund managers to claim rich refund checks for the 2018 and 2019 tax years – by shifting losses incurred in 2020 to 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 these ultra-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.   

The tax benefits from the Republican provisions dwarf payments flowing to working Americans. Based on the JCT’s analysis, these ultra-wealthy 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.