Today’s two actions are about the rich taking advantage of a pandemic to grab more than their share. So we’re starting with a video from a millionaire.
For the GOP, the pandemic has opened up a huge opportunity – their $500 billion dollar conoravirus stimulus package has been called a “robbery in progress,” a huge, barely -controlled giveaway of taxpayer money and tax benefits to huge corporations and the wealthiest private citizens in the country. “It’s a bailout for twelve years of corporate irresponsibility that made these companies so fragile that a few weeks of disruption would destroy them. The short-termism and lack of capital reserves funneled record profits into a bathtub of cash for investors. That’s who’s being made whole, financiers and the small slice of the public that owns more than a trivial amount of stocks.”
There are some voices of dissent amongst the wealthy. Maybe, they’ll listen to their own.
“The working class has lost sight of the fact, or just don’t understand, that we wealthy are fully in charge. We own Congress. We own the White House. We wealthy are running the country to our benefit….
All my wealthy friends think I’m crazy. I think they’re crazy. …We cannot continue to run this country the way we are for long. It may last our lifetimes, but that’s pretty selfish isn’t it? That we don’t concern ourselve more with our children, and probably more importantly, our grandchildren, that’s a pretty selfish shortsight view and I don’t think it’s really the American way.”
Action #1: It this stimulus package was supposed to be about jobs, why did the GOP want a 6-month wall of secrecy around who gets the money?
Demand complete transparency on how our hard-earned dollars are being used.
“With $2 trillion in federal spending, oversight is not an elective: it’s an imperative.“ – Rep. Katie Porter (D – CA, Irvine)
“If your stated policy goal is around jobs, you can’t reasonably expect to put trillions of dollars of taxpayer money into a system and expect that result, if you’re not willing to take the step of putting those restrictions in place, or putting at least incentives in place, to accomplish those goals,” he says. “Otherwise … you run a very significant risk that rather than preserve jobs, the money is going to flow right through the company and into the pockets of shareholders.” – Neil M. Barofsky, who oversaw the spending from the 2008 bank bailout. (This video was created before Trump’s signing statement.)
“You’re absolutely dreaming if you think a nasty inspector general report… is gonna stop Donald Trump from misusing this $500 billion loan program. Are you kidding?” tweeted Farhad Manjoo, opinion columnist at the New York Times.
“This is a frightening amount of public money to have given a corrupt admin w/ 0 accountability.“ – AOC
The GOP shares our president’s unerring instinct for corruption, initially handing Trump-appointee Treasury Sec. Steven Mnunchin unilateral authority to disburse billions of dollars of business bailout funds, along with keeping recipients’ identities secret for six months. Too obvious, even for them. The Democrats fought to add an independent oversight mechanism, well-aware of the squandering of taxpayer money during the 2008 bailout of the banking industry, where billions of our dollars were directed to foreign banks and millions into CEO pockets under the sole control of the Treasury Secretary Hank Paulson, former CEO of Goldman Sachs. (Results from that bailout are still being tracked here.) Most Americans agree that some form of “guardrails” is necessary for those receiving corporate bailout funds. However, those written in the bill may not be enough.
Gag orders: With his multi-generation background of tax dodging, his refusal to reveal his own tax returns, an attempt to give himself a multi-million contract hosting the Group of Seven meeting, and the recent judgement against his own shady charity, it surprises no one that our president added a signing statement to our third stimulus bill indicating that he won’t cooperate with Congressional oversight provisions for the distribution of billions of our tax dollars to large corporations, i.e., open(ing) the way to finagling, waste and grifting.”
Weasel words: Even though Democrats put in conflict-of-interest language preventing Trump from grabbing parts of the $500 billion pot himself, he can still direct money to his friends and donors through Mnuchin, which is almost better for someone running for office. “The law does have important “guardrails,” says Rep. Katie, like preventing increases in executive compensation for companies that get a loan and barring stock buybacks during the loan period. But that’s about it. What it doesn’t do is provide any conditions that the loan money be used to keep people on payroll—which is really the point of doing this.” The bill requires that eligible companies keep employees on until September 30, 2020, and maintain their March 24, 2020 employment levels, “to the extent practicable”, and not reduce its employment levels by more than 10% from the levels on such date. So, companies who laid people off early are in the clear, others can plead whatever “extent practicable” means.
Minimal script: I’m calling from [zip code] to tell Rep. [__] that we want active, not retrospective, oversight over the large corporations receiving bailouts under H.R. 748, the “CARES Act”, guaranteeing that they use our money responsibly and transparently. To that end, we want recipients, whether they end up being chosen by the committee or forced through by the president, to be tracked on their adherence to the the Act, as well as these basic 8 principles, on the Treasury Department website.
- Companies must maintain payrolls and use federal funds to keep people working.
- Businesses must provide $15 an hour minimum wage quickly but no later than a year from the end
- Companies would be permanently banned from engaging in stock buybacks.
- Companies would be barred from paying out dividends or executive bonuses while they receive federal funds and the ban would be in place for three years.
- Businesses would have to provide at least one seat to workers on their board of directors, though it could be more depending on size of the rescue package.
- Collective bargaining agreements must remain in place.
- Corporate boards must get shareholder approval for all political spending.
- CEOs must certify their companies are complying with the rules and face criminal penalties for violating them.
Additional acts if you want to add them in…
- Executive compensation would be controlled until we’re completely paid back, with interest.
- The government would take equity positions in all companies who take bailout funding.
- Any corporation receiving a bailout should be required to wipe out all shareholder equity, zero out all CEO deferred compensation packages, and replace its top five corporate officers as well as its entire board of directors. Reputable experts have been warning about the economic and business risks of pandemics for years. If business leaders didn’t prepare their organizations, they own the consequences.
- Require corporations to disclose supply chain disruption and pandemic risk.
- Hotel giant Hilton announced a $2 billion stock buyback on March 3, weeks after coronavirus cases began affecting the industry. What were they thinking?
- Require corporations to make human capital disclosures, environmental, social and governance disclosures, and political campaign contribution disclosures and how the financial assistance provided to the company was used to support the company’s employees.
- Refuse bailout funding to corporations who’ve actively refused to pay their fair share of taxes by hiding profits using offshore tax havens and foreign subsidiaries and “inversions.” From a 2016 report: “Between 2008 and 2014, the corporations received 27 times more in federal loans, loan guarantees, and bailouts than they paid in federal taxes. They kept $1.4 trillion in profits offshore (just four financial institutions had 10,688 offshore subsidiaries in 2014)” This cost states billions of dollars of lost tax revenue as well. Make these tax-dodgers bring every dime back and pay their full tax bill like their employees do, before they get a dollar of bailout money.
- Do not let Trump and Mnuchin finagle a way to bail out his buddies/donors in the cruise business. These three cruise companies who make up around 70 % or more of the global cruise ship market are not American. Carnival Corporation, whose Princess ship was part of the early spread of COVID-19, is incorporated in Panama, Royal Caribbean is incorporated in Liberia and Norwegian Cruise Line is incorporated in Bermuda, to avoid paying us taxes and following our labor laws. These companies are not big job creators for US citizens, they aren’t essential, and are big polluters. The Democrats added language forbidding non-American based companies from profiting but their owners would like loan guarantees from us. Go ask Panama, Liberia and Bermuda. However, Trump is receiving personal calls from Micky Arison, chairman of Carnival because, well, a picture (below) is worth a thousand words…
- Create an oversight agency to fight corporate corruption and price-gouging. State governors will have ample evidence to submit from their efforts to buy medical supplies. Trump signed an executive order. Not enough.
- Airlines receiving aid will be prohibited from buying back shares of their own stock for a year after the loan is fully paid off and bars them from issuing dividends to shareholders while receiving aid and they must “refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020,” which is not a long time. Even so, this provision can be waived by the Treasury Secretary if deemed “necessary to protect the interests of the Federal Government.” However, for this abusive, profligate industry there should be more.“Infusion of money to the airlines must have some major strings attached, including new rules to prohibit consumer abuses like unfair change and cancellation fees; protections for front-line workers like flight attendants, pilots, and airport workers; special consideration for our smaller, regional carriers not represented by the major trade associations; and the development of long-term strategies and targets to reduce the carbon footprint of the airline industry.“- Sen. Ed Markey, a Democrat from Massachusetts
- The Transportation Workers Union have proposed a ban on Chapter 11 bankruptcy filings by companies that receive federal fundsfor five years.
Action #2: The GOP used this emergency to “fix” their 2017 Tax Scam, giving back limitless depreciation to the rich.
Instead about complaining about the lack of hazard pay or personal protective devices for low wage workers forced to interact with the public in “essential” positions, four GOP senators threatened to hold up passage the Senate coronavirus bill over the inclusion of $600/week extra on top of a state’s unemployment check, something that would actually help poor and middle-class Americans. Lead by Sen. Lindsey Graham (R-SC) -“If this is not a drafting error, then this is the worst idea I have seen in a long time. We need to create a sustainable system.” Sen. Rick Scott (R-Fla.), who joined the other three senators at a press conference on the issue Wednesday, added in a tweet that “we shouldn’t have policies in place that disincentivize people from returning to the workforce.”
This was a diversion. In our continuing unsustainable system of giving huge amounts of money to those who least need it, the GOP-controlled Senate slipped a provision into economic rescue bill that could provide our country’s wealthiest citizens over $170 billion over 10 years in tax relief for real estate depreciation. The top 1% of taxpayers can now deduct an unlimited amount of “excess losses” in real estate against income from other sources, such as jobs or capital gains, ultimately paying no taxes. Appreciative recipients will include our morally-slippery President and his son-in-law, Jared Kushner, the latter having used this scheme to pay no taxes between 2009 and 2016. Surprisingly, limits on this trough-feeding were included in the GOP’s 2017 Tax Scam. This apparently traumatic issue has been “corrected” under cover of the pandemic stimulus.
This is a big deal. A draft congressional analysis this week found that the change is the second-biggest tax giveaway in the $2 trillion stimulus package. That cost analysis also includes the impact of some smaller technical changes to the law. Other industries, like oil and gas and commodities trading, also stand to benefit from the change.
Minimal script: I’m calling from [zip code] to ask Rep./Sen. [___] to heed our voice. We do not accept the business-as-usual corruption that allow the wealthiest Americans to walk away with the billions of dollars in tax relief while average Americans are wondering how they can save enough from their jobs, if and when they start again, to pay back their delayed rent or mortgage payments. That $170 billion dollars should be reeled back in to provice additional supports for the poor and middle class, equipment for first responders or payments for medical treatment for un-or-underinsured coronavirus patients. What are you going to do about this?
Rep. Julia Brownley: email, (CA-26): DC (202) 225-5811, Oxnard (805) 379-1779, T.O. (805) 379-1779
or Rep. Salud Carbajal: email.(CA-24): DC (202) 225-3601, SB (805) 730-1710 SLO (805) 546-8348
Senator Feinstein: email, DC (202) 224-3841, LA (310) 914-7300, SF (415) 393-0707, SD (619) 231-9712, Fresno (559) 485-7430
and Senator Harris: email, DC (202) 224-3553, LA (213) 894-5000, SAC (916) 448-2787, Fresno (559) 497-5109, SF (415) 355-9041, SD (619) 239-3884
Who is my representative/senator?: https://whoismyrepresentative.com
This is a good overall article, from the Patriotic Millionaires blog.
Follow the money. Trump will.: Though our president is specifically forbidden from sneaking money from the $500 billion pot for corporations, nothing appears to stop him from profitting from the bill’s small-business loans, the $15 billion change to the tax code benefitting restaurants and retailers and the removal of depreciation limits we discuss in Action #2 above. This can be added to the $11-$22 million annually he reportedly saves annually from signing the 2017 tax scam. He’s also charged us $1.2 million for various services at his properties since 2016 and according to the Citizens for Responsibility and Ethics (CREW), to the profit from over 2,300 conflicts of interest in his three years of office. Don’t worry about the president. Even without being properly thanked for giving up his salary, he’s doing OK.
What should be happening instead:
More information on the tax implications: From AmericansforTax Fairness.org – more information on the tax changes.
- Senate bill – Coronavirus Aid, Relief, and Economic Security Act (‘‘CARES Act”)”Division A“
- House Bill H.R H.R. 748. –Take Responsibility for Workers and Families Act:
Bill text Section-by-section One-pager
What’s in both versions
- Both bills give a windfall to many undeserving businesses by allowing them to get rebates on previous taxes paid by retroactively lowering past income through net operating losses. But the House bill imposes several restrictions on which companies may participate.
- Senate Bill (Sec. 2303): To reduce the revenue lost from slashing corporate taxes, the Tax Cuts and Jobs Act (TCJA) eliminated the ability of corporations and pass-through businesses (which include sole proprietorships, partnerships and S corporations) to “carry back” losses to previous years, though it extended their ability to subtract such current “net operating losses” (NOL) from future earnings. Corporations accepted limits on their use of NOLs in exchange for a much lower corporate income tax rate.
- The expanded five-year carry back provision is a huge giveaway—costing $195 billion according to the Joint Committee on Taxation (see table on p. 6), with most of the tax break going to pass-through businesses. (President Trump is a beneficiary of this.) Presumably the cost of this tax break will be from large losses many businesses will suffer due to the pandemic. Those losses will easily wipe out many years’ gains, transforming what were once tax liabilities into big refunds.
- The bill also inexplicably allows companies that generated losses in 2018 and 2019—before the pandemic—to get rebates for taxes owed in prior years. While this provision will get liquidity (i.e., cash in the form of tax refunds) into the hands of companies during this economic crisis, it will also be a handout to businesses that weren’t well enough managed to generate profits in the growing economy of 2018-2019.
- House Bill (Sec. 241): Like the Senate bill, the House bill would give corporations the ability to subtract current “net operating losses” (NOL) from past earnings to receive rebates on taxes paid during prior years. Also like the Senate bill, the House bill would let corporations apply losses generated in 2018, 2019 and 2020 against income in any of the past five years, reducing taxes owed in those past years and even transforming what were once tax liabilities into big refunds.
- However, unlike the Senate bill the House bill would impose some limits on participation in this benefit. “Pass-through” businesses—non-corporate entities which make up a big part of the economy and received a big tax cut from the Trump-GOP tax law—would not be eligible. To qualify a corporation must impose certain executive pay and “golden parachute” limitations. And any corporation that has returned to shareholders more than 5% of the business’ fair market value via stock buybacks or dividends is disqualified from this tax break.
Senate Provisions not in House Bill
- Section 2304 temporarily removes a TCJA restriction that limits the ability of wealthy owners of pass-through businesses, such as the real estate businesses ofPresident Trump and Jared Kushner, from using paper losses on their operations to offset unrelated gains from other sources and thereby lower their taxes or even generate refunds. For instance, owners of commercial buildings and other structures are allowed to write off, or “depreciate,” a portion of the value of that property each year to reflect theoretical wear and tear. The TCJA limited the use of those theoretical losses to reduce unrelated investment gains. This provision would lift that limitation for 2020, and retroactively for 2018 and 2019. President Trump and his family have in the past made heavy use of real-estate-related losses to avoid millions of dollars in taxes. It’s estimated by Congressional scorekeepers that the temporary reopening of this loophole for wealthy business owners will lose $170 billion over 10 years (see table on p. 6).
- Section 2306 would temporarily loosen new restrictions on the deduction of interest. In the 2017 tax law, as a partial tradeoff for the temporary allowance of businesses to immediately write off big-ticket purchases (“expensing”), their ability to deduct interest was limited. The Senate bill would loosen the interest deduction limits for the 2019 and 2020 tax years, allowing businesses to deduct half their interest costs rather than just 30%. And it would apply to all businesses, whether affected by the coronavirus pandemic or not—a costly and gratuitous handout. At the time the tax law was enacted, the tighter interest rules were estimated to raise more than $250 billion over 10 years. This temporary relaxation will cost the government some part of that. This is also good for Trump, family and wealthy donors.
- Section 2307 gives in to the restaurant industry demand to make a change to the 2017 tax law that it argues unfairly disadvantages it. Restaurants and other retail establishments have long complained that they were left out of a temporary provision of the Trump-GOP tax law that allows businesses to immediately write off the cost of capital investments. This provision includes them in this expensive tax break for businesses. (It is estimated to cost about $15 billion a year, which was already built into the cost of the Trump-GOP tax law when it passed in 2017.) In the present crisis, restaurant owners should not receive relief unless restaurant employees do as well. This fix to the so-called “qualified improvement property” (QIP) glitch for restaurants should be paired with an economic boost of equal or greater size for working Americans, as was proposed in the Economic Mobility Act in the House. That measure would increase the earned income tax credit in 2019 and 2020 for individuals with no qualifying children and make the child and dependent care tax credits fully refundable during the same period. (Trump owns restaurants.)
House Provisions Not in Senate Bill
- Section 211 expands the Earned Income Tax Credit (EITC) for childless adults. The minimum age for a childless adult to qualify for the credit would drop from 25 to 19 (if not a full-time student), while the upper age for claiming the credit would be raised from 65 to 66. The amount of the credit would be doubled from 7.65% of earned income to 15.3%. The amount of income recipients are allowed to earn before the credit partially and completely phases out would both be more than doubled, and those phaseout amounts would be indexed to inflation.
- 221 makes the Child Tax Credit (CTC) fully refundable in tax years 2020 through 2025, regardless of the level of earned income and even if the amount is over $1,400. The credit would rise from $2,000 to $3,000 per child aged 6 and over and be $3,600 for children under 6. Residents of Puerto Rico and other territories would be better able to participate in the program.
- Sec. 231 doubles the Child and Dependent Care Tax Credit (CDCTC) and increases the phaseout threshold from $15,000 to $120,000, with both amounts indexed to inflation. The CDCTC would be made refundable and the phase-out calculation modified. The amount of employer-provided assistance that can be disregarded when calculating benefits would rise from $5,000 to $10,500.