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A new analysis of the coronavirus relief bill passed by Congress last month has revealed that a provision aimed at reducing tax liabilities will overwhelmingly benefit the wealthy – namely taxpayers whose annual income meets or exceeds $1 million.

The analysis was conducted by the Joint Taxation Committee, which is a nonpartisan congressional body consisting of five members of the U.S. Senate Finance Committee and five members of the House Ways and Means Committee.

The provision, inserted by Senate Republicans in Section 2303 just two days before the CARES Act was reaffirmed by the U.S. House of Representatives and signed into law by the president, temporarily suspends the limit on how much net operating losses (NOL) owners of “pass-through” entities can deduct from their non-business income, thus reducing their overall tax liability.

Put another way, the provision allows taxpayers to minimize the amount of taxes they pay on things like capital gains earned from investments in the stock market by deducting unlimited amounts of business losses from that income.


A second provision inserted into Section 2304 allows both corporate and non-corporate taxpayers to retroactively carry such losses back in time in order to cancel out income and potentially receive tax refunds. Both provisions suspend aspects of the Tax Cuts and Jobs Act of 2017, which limited NOL deductions and prohibited taxpayers from retroactively using business losses to avoid paying taxes in prior years.

Neither of the two provisions inserted into the bill were specifically voted on by the Senate or House.

According to an April 9 letter to Sens. Sheldon Whitehouse (D-RI) and Lloyd Doggett (D-TX) from the Joint Taxation Committee, some 43,000 taxpayers in the “$1 million and over” tax bracket will see a combined $70.3 billion reduction in their overall tax liability for 2020 – accounting for approximately 82% of the total tax break benefits; less than 3% of the benefits will go to taxpayers earning less than $100,000.

While the suspension of the limitation on deductions was framed as a way to increase cash flow for business owners impacted by the global COVID-19 pandemic, the tax breaks have been criticized as just another tax cut for the wealthy. Whitehouse accused Republicans on Tuesday of using the relief bill and the provisions to “loot American taxpayers in the midst of an economic and human tragedy.”

The provisions could add close to $170 billion to the national deficit over the next decade.

Final Bill Passed Unchallenged In Senate And House; Neither of McConnell’s Provisions Got A Vote

While the tax provisions have earned criticism from Whitehouse and Doggett in recent days, the amendment in which they were included ultimately went unchallenged in both the House and the Senate last month due to the lack of an open amendment process, which prevented lawmakers in either chamber from voting in favor or against individual provisions like the tax breaks.

Senate Majority Leader Mitch McConnell (R-KY) introduced the provisions as part of an amendment to the bill on March 25 and following a request for unanimous consent, the bill passed the Senate with 96 yeas, including every Democratic senator.

Although a unanimous consent (UC) vote does not denote unanimous support for a piece of legislation, it speeds up the lawmaking process by limiting the amount of debate on a piece of legislation and eliminating other votes. While a single lawmaker can object to a UC request and thus pave the way for debate on an issue, no senator objected to McConnell’s request for unanimous consent on the bill and its amendments.

The House passed the bill with the included Senate amendments by voice vote March 27.

Connecticut’s Delegation Offers Mixed Response To Criticism

Asked about his support for the bill and the provisions, U.S. Rep. John Larson said Friday that the CARES Act was not a perfect bill, but a compromise that provided “much needed relief to the American people.” Larson said the provisions in question should have been more targeted and included “safeguards to ensure companies are keeping employees on payroll,” and that he was working with colleagues on future relief packages that would help working and middle class Americans.

While U.S. Sen. Richard Blumenthal acknowledged his vote in favor of the bill, he also called for the repeal of the provisions – labeling them a “shameful special interest giveaway” for which the Trump administration and Republicans should be held accountable.

“It must be eliminated before it causes waste of taxpayer money, benefiting interests that need it least,” he said Friday. “It has no place in a bill intended to provide essential protective equipment to doctors, dispense desperately needed cash to struggling families and small businesses, and meet other urgent needs in this unprecedented crisis.”

U.S. Rep. Rosa DeLauro also joined the call for the repeal of the tax provisions in the next COVID-19 relief bill considered by Congress, but claimed in a letter to congressional leaders Friday that the “House was not aware of this provision when it passed the emergency legislation” and cited the fact that no hearings were held on the tax provisions.

CARES Act Included Billions In Unemployment Relief And More

Originally introduced in the House in January 2019 by U.S. Rep. Joe Courtney as a bill to repeal the excise tax on employer-sponsored health care coverage involving high-cost plans, the CARES Act went through several iterations in March 2020 before becoming the Coronavirus Aid, Relief, and Economic Security Act.

The $2 trillion relief package included hundreds of billions in unemployment insurance benefits, relief for small businesses, $1,200 checks to millions of taxpayers, and more.