Letter to Speaker Pelosi & Senate Majority Leader Schumer - Pingree Joins Call to Repeal GOP Tax Giveaway Included in the CARES Act

Letter

Dear Speaker Pelosi and Leader Schumer:

As we continue to debate allocating limited resources to stimulate the economy, we write to bring your attention to costly tax breaks for so-called "net operating losses" that Republicans tucked into the CARES Act. These special-interest giveaways will confer over 80 percent of the benefits to just 43,000 taxpayers, each earning at least $1 million per year. We urge you to repeal these unwarranted tax cuts, as HEROES and HEROES 2.0 proposed and President Biden has recommended. This would save over $250 billion, which should be repurposed to help Americans who have lost income due to the pandemic and its economic fallout.
According to Mark Zandi, chief economist of Moody's Analytics, NOL tax breaks are the least effective way to stimulate the economy of over 20 policies reviewed, generating just 27 cents of GDP for every dollar of federal cost. What's more, these ineffective giveaways benefit a narrow set of high-income taxpayers, including hedge funds, real estate developers, and likely the Trump family.
The Trump tax law placed temporary restrictions on NOL gimmicks in order to raise revenue for other tax cuts in the bill. These were among the few provisions of the Trump tax law that, standing alone, pushed the tax code in a progressive direction. We support restoring these limitations and making them permanent. Making them permanent alone could save the federal budget over $100 billion.
The repeal of NOL limitations in the CARES Act had little to do with pandemic relief and arbitrarily rewards business owners who lost money before the pandemic began. Making matters worse, unlike the small business relief provided through the Paycheck Protection Program, these windfalls come with no strings attached to ensure they support payroll or critical business operations.
In addition to presenting immediate hardships, the COVID-19 pandemic has laid bare and magnified our nation's troubling economic inequality. Relief must address this inequality, not exacerbate it. The CARES net operating loss provisions will further worsen economic inequality by providing an average tax break of $1.6 million to just 43,000 very high-income
taxpayers. This is unacceptable, especially when compared to the limited relief most Americans have received.

We urge you to repeal the NOL giveaways by including sections 20301 and 20302 of the HEROES Act in the next COVID-19 relief legislation. Further, we ask that you repurpose these funds to provide relief for families struggling though this challenging time.

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