Paul L. Caron

Saturday, April 25, 2020

The Corrupt QBI And NOL Tax Provision In The CARES Act

USA Today op-ed:  The Corrupt Tax Provision in the CARES Act, by Rep. Doggett & Sen. Whitehouse:

As Americans battled the human and economic devastation of COVID-19, Congress sent rapid relief out to families, our health sector, small businesses and our economy.  The most recent relief bill, the CARES Act, enjoyed wide bipartisan support and will help if implemented effectively. But tucked into its 880 pages were Republican-inserted tax provisions. The more we’ve learned about their immense cost and the few that they benefit, the clearer it is that they have to go.

These costly tax breaks are an inside hit job. They allow certain investors — particularly real estate speculators and hedge fund managers — to cut their tax bills by shifting losses to prior tax years. Working families who have a bad year would surely love the same chance to use a previous loss to secure a tax refund, but they don’t get this special treatment. 

The result of the two provisions is stunning in its size: $195 billion taken from the public treasury. According to early analysis from Congress’s nonpartisan Joint Committee on Taxation on the costlier provision (worth nearly $170 billion), the beneficiaries are few: 43,000 million-dollar-plus income earners will reap over 80% of the windfall — coming in at an eye-popping average of $1.6 million each in 2020 alone. That’s 1,300 times what regular Americans are getting with their $1,200 checks going out under the CARES Act.

At $195 billion, these reverse-Robin Hood provisions are nearly twice the $100 billion Congress provided to American hospitals and far more than the $150 billion going to state and local governments already buckling under the weight of the crisis. ...

The tax breaks obviously contribute nothing to battling the coronavirus; they also do little to aid workers and the economy. Large corporations were also authorized to convert losses from two years before the pandemic into immediate tax refunds. ...

We are offering legislation to unwind this massive tax giveaway, to recover the lost revenues and to use them to combat the pandemic and help small businesses and those truly in need during this challenging time. 

For complete TaxProf Blog coverage of the coronavirus, see here.

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