JCT Estimates Drop in High-Income Taxes From CARES Act

WHITEHOUSE, DOGGETT RELEASE NEW ANALYSIS SHOWING GOP TAX PROVISIONS IN CARES ACT OVERWHELMINGLY BENEFIT MILLION-DOLLAR-PLUS EARNERS

Joint Tax Committee breakdown shows 4 OUT OF 5 tax filers that benefit make $1 million or more; A wealthy few would receive an average windfall of $1.6 MILLION — dwarfing bill's $1,200 payments for working Americans; costliest

04.14.20

Washington, DC — Senator Sheldon Whitehouse (D-RI) and Lloyd Doggett (D-TX) released analysis today 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 This net operating loss loophole is a loser that should be repealed.”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.” Read the letter here.

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April 9, 2020

Honorable Sheldon Whitehouse
United States Senate
SH-530
Washington, D.C. 20510

Honorable Lloyd Doggett
U.S. House of Representatives
2307 Rayburn House Office Building
Washington, D.C. 20515

Dear Senator Whitehouse and Mr. Doggett:

This is in partial response to your request dated April 7, 2020, for information about the distributional effects of the temporary suspension of the limitation on excess business losses for taxpayers other than corporations for taxable years beginning in 2018, 2019, and 2020. The table below is consistent with the revenue estimate provided for the CARES Act, to which you referred. The table shows the distributional effects for 2020, the year in which the liability change is the greatest because assumed losses are the greatest. The revenue estimate assumes that business losses of individuals will be much higher in 2020 than would have been assumed at the start of this year. However, we did not assume that the increase in losses would fall disproportionately on certain industries or on certain business entities based on the size of those business entities. There is, of course, a great deal of uncertainty about the economic effects of the COVED-19 pandemic, and how those economic effects will translate into business losses for individuals. The revenue estimate represents our best effort to give Congress useful information about the potential scale of revenue changes associated with this provision.

INCOME CATEGORY (1)	Calendar Year 2020
	Number of Returns	Change in Tax Liability	Percent of Total
	Thousands	$Billions
Less than $10,000	1	-0.1	0.1%
$10,000 to $20,000	1	-0.2	0.2%
$20,000 to $30,000	2	-0.2	0.3%
$30,000 to $40,000	2	-0.2	0.3%
$40,000 to $50,000	3	-0.3	0.3%
$50,000 to $75,000	6	-0.7	0.8%
$75,000 to $100,000	9	-0.6	0.7%
$100,000 to $200,000	21	-2.2	2.6%
$200,000 to $500,000	25	-5.2	6.0%
$500,000 to $1,000,000	19	-6.1	7.1%
$1,000,000 and over	43	-70.3	81.8%
Total, All Individual Taxpayers with Business Income or Loss	130	-$86.0	100.0%
Source: Joint Committee on Taxation

Details may not add to total due to rounding.

The income concept used to place tax returns into income categories is adjusted gross income (“AGI” plus: [1] tax-exempt interest, [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] workers' compensation, [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2020 levels.

Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

I hope this information is helpful to you. If we can be of further assistance in this matter, please let me know.

Sincerely,

Thomas A. Barthold