Sadly but predictably, the snake oil cures and scams meant to exploit the coronavirus crisis for personal gain seem endless.
But perhaps the greatest scam was the one approved by Congress with overwhelming bipartisan support and signed into law by President Donald Trump on March 27.
The $2 trillion rescue measure known as the Coronavirus Aid, Relief, and Economic Security Act delivered a $135 billion tax break for the wealthy elites like hedge-fund investors and real estate tycoons.
In the midst of the greatest medical and economic crisis in modern history, Congress chose to give a tax break almost exclusively to Americans making more than $1 million a year, handing each of those 43,000 lucky souls a tax cut averaging $1.6 million. Meanwhile, working Americans are expected to get by on a $1,200 relief check.
The $135 billion lavished on the rich by this “Millionaires Giveaway” was nearly triple what the CARES Act spent on safety net programs for the poor ($42 billion). It also exceeded the support for hospitals and public health ($100 billion) and nearly equaled the aid allotted to state and local governments ($150 billion).
Thankfully, efforts have begun to end this high-end rip-off. On May 15, the U.S. House of Representatives, controlled by Democrats, passed a repeal of this giveaway as part of its proposed COVID-19 relief package, the HEROES Act. Because it would make a permanent fix to the 2017 tax provision underlying the giveaway, the HEROES Act actually raises more money than the Giveaway lost, gaining nearly $250 billion.
Senate Majority Leader Mitch McConnell says we’re spending too much money fighting the coronavirus and the associated recession, and need to “take a pause” on additional relief. Repealing the Millionaires Giveaway would be an easy way to curb the spending he deems so excessive.
The Millionaires Giveaway lets wealthy households manipulate business losses to dodge taxes. It removes a limit of $500,000 per couple or $250,000 per individual imposed in 2017 on the amount of business losses that could be used to lower taxes. Worse, it applied not only for this crisis year, but for the tax years 2018 and 2019 as well. That means losses racked up purely through mismanagement in those two boom years can now be used to amend old tax returns.
Real estate investors will particularly profit because so many of their losses are an accounting fiction. Commercial property owners can claim wear-and-tear “losses” (depreciation) on buildings that are actually gaining market value.
My organization, Americans for Tax Fairness, just reported that U.S. billionaires saw their worth skyrocket by $434 billion, or 15%, during the past two months of the pandemic, while the number of people filing for unemployment spiked to 38 million. If ever there was a time for a massive working-families rescue package, this is it.
The Millionaires Giveaway is pandemic profiteering by high-paid lobbyists in three-piece suits. But happily, while small-time COVID-19 rip-offs may be hard to curb, Congress can eliminate this mammoth money grab. All it needs to do is adopt the HEROES Act already passed by the House or include it in the forthcoming Senate bill and send it for the president’s signature.
Frank Clemente is executive director of Americans for Tax Fairness.