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Democrats offer bill to undo business tax provisions in coronavirus law

Democrats offer bill to undo business tax provisions in coronavirus law
© Greg Nash

A group of Democrats has introduced a bill to undo business tax provisions in coronavirus relief legislation that have been at the center of controversy.

The relief package President TrumpDonald John TrumpBiden campaign slams Facebook after thousands of ads blocked by platform's pre-election blackout Mnuchin says he learned of Pelosi's letter to him about stimulus talks 'in the press' Harris to travel to Texas Friday after polls show tie between Trump, Biden MORE signed late last month, known as the CARES Act, included provisions that loosened rules relating to businesses' net operating losses (NOLs). Republicans argue that the provisions allow businesses to have more cash flow that they can use to retain their employees during the coronavirus crisis. But many Democrats argue that they are too generous to wealthy business owners.

Rep. Lloyd DoggettLloyd Alton DoggettCongress must repeal tax breaks for the wealthy passed in CARES Act Ocasio-Cortez, progressives call on Senate not to confirm lobbyists or executives to future administration posts Trump order on drug prices faces long road to finish line MORE (D-Texas) and Sen. Sheldon WhitehouseSheldon WhitehouseDemocrats warn GOP will regret Barrett confirmation GOP Senate confirms Trump Supreme Court pick to succeed Ginsburg Senators battle over Supreme Court nominee in rare Saturday session MORE (D-R.I.) have been leading the Democratic criticism of the provisions, and on Friday they rolled out legislation to undo them and create a new provision that is designed to be more targeted to smaller businesses.

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“Tax giveaways for a wealthy few shouldn’t have come near a coronavirus relief bill. Relief legislation ought to address the needs of small businesses and workers, not fleece taxpayers to benefit real estate moguls and hedge fund billionaires,” Whitehouse said in a statement. “By repealing these special interest giveaways, we can free up billions of dollars for federal assistance our communities and economy so desperately need.”

Doggett and Whitehouse's bill would repeal a provision in the CARES Act that removed a limitation on the amount of business losses owners of non-corporate businesses could use to offset their non-business income. The Democrats' bill reinstates the limits of $250,000 for an individual and $500,000 for a married couple.

The Joint Committee on Taxation (JCT) estimated, in an analysis requested by Doggett and Whitehouse, that the vast majority of the tax cuts from the CARES Act provision would go to households with income of at least $1 million. JCT has also estimated that the CARES Act provision costs about $135 billion over 10 years.

“This provision isn’t about coronavirus, working families or small businesses struggling to stay afloat," Doggett said. "It is just more insider politics to get millions to those who have millions, especially real estate investors and hedge fund managers. Repealing this giveaway will free resources needed to help those truly in need.”

The Democrats' bill also would replace another provision in the CARES Act relating to NOLs — which allows businesses to carry back  losses generated in 2018, 2019 or 2020 for up to five years — with a new provision that is narrower.

Doggett and Whitehouse's bill would allow companies with less than $15 million in receipts to carry back losses generated in 2020 for up to two years. Companies that qualify would be able to apply to get an advance refund of up to $100,000 in order to receive money more quickly. Companies that have engaged in significant stock buybacks would not be able to utilize the provision. 

A number of Democratic lawmakers have co-sponsored Doggett and Whitehouse's bill, including Sen. Sherrod BrownSherrod Campbell BrownOn The Money: Dow falls more than 900 points amid fears of new COVID-19 restrictions | Democrats press Trump Org. about president's Chinese bank account | Boeing plans thousands of additional job cuts Democrats press Trump Organization about president's Chinese bank account Brown says Biden's first moves as president should be COVID relief, voting rights MORE (Ohio) and Reps. Jamie RaskinJamin (Jamie) Ben RaskinCongress must repeal tax breaks for the wealthy passed in CARES Act COVID-19 and the problem of presidential succession Warren, Porter to headline progressive fundraiser supporting seven swing state candidates MORE (Md.), Rosa DeLauroRosa Luisa DeLauroWorking together to effectively address patient identification during COVID-19 Congress must repeal tax breaks for the wealthy passed in CARES Act Century of the Woman: The Fight for Equal Pay MORE (Conn.) and Steve CohenStephen (Steve) Ira CohenDe Blasio mum on whether he'll block sale of Mets to controversial investor Two ethics groups call on House to begin impeachment inquiry against Barr Jewish lawmakers targeted by anti-Semitic tweets ahead of election: ADL MORE (Tenn.).