Sens. Whitehouse, Doggett Release New Analysis Showing GOP Tax Provisions in CARES Act Overwhelmingly Benefit Million-Dollar-Plus Earners

WASHINGTON, April 15 -- Sen. Sheldon Whitehouse, D-Rhode Island, issued the following news release:

Senator Sheldon Whitehouse (D-RI) and Lloyd Doggett (D-TX) released analysis from the Joint Committee on Taxation (JCT) showing a massive windfall for a small group of wealthy taxpayers from a Republican provision in the coronavirus relief bill. According to the JCT, 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. The JCT analysis shows nearly 82 percent of those who will benefit from that provision make $1 million or more, with 95 percent making over $200,000.

"It's a scandal for Republicans to loot American taxpayers in the midst of an economic and human tragedy," said Whitehouse. "This analysis shows that while Democrats fought for unemployment insurance and small business relief, a top priority of President Trump and his allies in Congress was another massive tax cut for the wealthy. Congress should repeal this rotten, un-American giveaway and use the revenue to help workers battling through this crisis."

"For those earning $1 million annually, a tax break buried in the recent coronavirus relief legislation is so generous that its total cost is more than total new funding for all hospitals in America and more than the total provided to all state and local governments," said Doggett. "Someone wrongly seized on this health emergency to reward ultrarich beneficiaries, likely including the Trump family, with a tax loophole not available to middle class families. This net operating loss loophole is a loser that should be repealed."

Based on to the JCT analysis, millionaire tax filers benefiting from one of the Republican provisions will see an average windfall of $1.6 million this year alone. That windfall dwarfs the Coronavirus Aid, Relief, and Economic Security (CARES) Act's $1,200 benefit for working families.

The changes included in the CARES Act would allow wealthy taxpayers to use losses in certain years to avoid paying taxes in other years. The day after Senate passage of the CARES Act, the JCT published a document estimating that the provisions together will reduce government revenue by $195 billion over ten years. Together, the changes are among the costliest provisions in the bill.

Last week, Whitehouse and Doggett sent a letter to senior Trump administration officials requesting communications that may shed light on the origins of the Republican provisions. According to reports, beneficiaries of the tax giveaways may include President Trump, his son-in-law Jared Kushner, and "real estate investors in President Trump's inner circle."

* * *

To:

The Honorable Mike Pence

Vice President of the United States

The White House

Washington, D.C. 20501

The Honorable Steven T. Mnuchin

Secretary of the Treasury

U.S. Department of the Treasury

1500 Pennsylvania Avenue NW

Washington, D.C. 20220

The Honorable Russell T. Vought

Acting Director

Office of Management and Budget

725 17th Street NW

Washington, D.C. 20503

Dear Vice President Pence, Secretary Mnuchin, and Acting Director Vought:

We write to request communications and other information pertaining to the Trump administration's advocacy for two tax provisions included in the Coronavirus Aid, Relief, and Economic Security Act (PL 116-136). These provisions are Title 2, Subtitle C:

SEC. 2303. MODIFICATIONS FOR NET OPERATING LOSSES; and

SEC. 2304. MODIFICATION OF LIMITATION ON LOSSES FOR TAXPAYERS OTHER THAN CORPORATIONS.

As you know, the 2017 tax law (PL 115-97) changed the way non-corporate taxpayers can carry losses from a given year to minimize their tax bills in other years. Beginning in tax year 2018, taxpayers filing jointly could only use $500,000 in losses from actively-managed investments, like pass-through income from businesses, to offset wage or capital gains income. For example, if one spouse owns a company that had a $5 million loss in 2018 and the other spouse made $5 million from stock market investments, this limitation meant that the couple's taxable income was $4.5 million (not zero, if the loss were allowed to fully cancel out the income). The other $4.5 million in losses, however, could be carried forward to use in future years.

PL 115-97 included another change that prohibits corporate and non-corporate taxpayers from carrying losses back in time. Before this change, a taxpayer that incurred a big loss in a given year could retroactively amend prior tax returns (going back up to five years) to use the losses to cancel out income, and thus to receive tax refunds. The 2017 law allowed losses to be carried forward indefinitely to future years but also limited the amount of income losses can offset to 80% of taxable income in a given year. Thus, a taxpayer with $10 million in income would still have at least $2 million in taxable income, regardless of losses.

Sections 2303 and 2304 effectively suspend these changes for tax years 2018 through 2020. Following passage of this legislation, the Joint Committee on Taxation estimated the provisions together would reduce revenue by $195 billion over ten years, together, among the costliest provisions in the bill.

So that Congress and the American public can better understand the provenance of these tax law changes, and assess whether any individuals within the Administration who stand to gain from these provisions were involved in their development, we request you provide the following information within 15 days of the date of this letter:

* All communications from January 1, 2020 to the present between the White House, Department of Treasury, or the Office of Management and Budget and any non-government person or entity related to sections 2303 or 2304, or the policies modified by those sections.

* All communications between the Department of Treasury and the White House, and between the Department of Treasury and the Office of Management and Budget, related to sections 2303 or 2304, or the policies modified by those sections, in the development of the Coronavirus Aid, Relief, and Economic Security Act.

* All studies, analyses, proposals, cost estimates, or other information considered by the White House, the Department of Treasury, or the Office of Management and Budget related to sections 2303 or 2304, or the policies modified by those sections, in the development of the Coronavirus Aid, Relief, and Economic Security Act.

Thank you for your prompt attention to this request.