As millions of Americans receive coronavirus relief stimulus checks in the amount of $1,200, some wealthier citizens are getting payouts of $1.7 million. According to Forbes, about 43,000 taxpayers — whose annual income exceeds $1 million — are each set to get the major relief payments, on average. This is due to a little-known provision that was included in the Coronavirus Aid, Relief and Economic Security (CARES) Act.
The provision in question is related to a limitation that was created in 2017, when Republican politicians made changes to the tax code. Per the Washington Post, it "temporarily suspends a limitation on how much owners of businesses formed as 'pass-through' entities can deduct against their non-business income, such as capital gains, to reduce their tax liability." Senator Sheldon Whitehouse and Representative Llloyd Doggett requested a Joint Commission on Taxation report for the provision. The report concluded that suspending the 'pass through' limitation would cost the government more than $90 billion in 2020 alone.
Doggett commented on the findings, arguing that the provision is going to come at a greater cost in other areas. "For those earning $1 million annually, a tax break buried in the recent coronavirus relief legislation is so generous that its total cost is more than total new funding for all hospitals in America and more than the total provided to all state and local governments," he said. "Someone wrongly seized on this health emergency to reward ultrarich beneficiaries, likely including the Trump family, with a tax loophole not available to middle class families. This net operating loss loophole is a loser that should be repealed."0comments
The analysis by the Joint Commission on Taxation report found that "82 percent of the benefits of the policy go to about 43,000 taxpayers who earn more than $1 million annually." Forbes states that as the report's calculations are taken at face value, it does confirm that each of the eligible taxpayers would potentially be able to get $1.7 million.
The outlet clarified that the number is not firm, but an average, as some may not receive the money. Additionally, some who do benefit from the provision may receive a lesser amount. They did go on to note that this could also mean some eligible taxpayers would be entitled to more. Per the terms of the CARES Act, the majority of taxpaying Americans over 18 will be getting $1,200 each, with parents receiving $500 for each child. The stimulus payments are currently going out via direct deposit, per the IRS.