Millionaires to reap 80% of benefit from tax change in US coronavirus stimulus

https://www.theguardian.com/world/2020/apr/15/tax-change-coronavirus-stimulus-act-millionaires-billionaires

Amanda Holpuch in New York
Wed 15 Apr 2020 13.57 EDT

Millionaires and billionaires are set to reap more than 80% of the benefits from a change to the tax law Republicans put in the coronavirus economic relief package, according to a non-partisan congressional committee.

The change – which alters what certain business owners are allowed to deduct from their taxes – will allow some of the nation’s wealthiest to avoid nearly $82bn of tax liability in 2020.

Nearly 82% of the benefits from the tax law change will go to people making $1m or more annually in 2020, according to an analysis by the joint committee on taxation (JCT). Overall, 95% of individuals who benefit from the change make $200,000 or more.

Taxpayers will lose nearly $90bn from the change, which suspends a restriction introduced in the 2017 tax bill.

The change allows owners of businesses known as pass-through entities to lower their taxes by deducting as much as they want against income unrelated to the business.

Before, owners of pass-through entities could deduct a maximum of $250,000 in losses from non-business income such as stocks and bonds. This limitation was introduced in the 2017 law to offset other tax benefits going to firms.

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Because of the suspension, the JCT estimated 43,000 people making $1m or more would owe a total of $70.3bn less in taxes in 2020. Less than 3% of the benefits from the change will go to Americans earning less than $100,000 a year.

Steve Rosenthal, a tax expert at the Tax Policy Center, a non-partisan thinktank, told the Washington Post hedge-fund investors and owners of real estate [eg., Trump] would benefit most from the change.

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“It’s a scandal for Republicans to loot American taxpayers in the midst of an economic and human tragedy,” Whitehouse said in a statement. “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.”