The Cares Gave Much More to Wealthy Than the $1200 Given to Middle Class
The CARES Act provided benefits to the wealthy worth much more than the $1200 for middle class and below, according to ProPublica.
There were five provisions contained in the bill that benefited those who did not receive the $1200 cash payment. These fives provisions to help the wealthy will cost taxpayers $257.95 billion in 2020, almost as much as the $292.37 billion spent on cash payments.
- The first provision eliminated the required distributions from retirement accounts. People aged 72 and up that typically must take minimum distributions from their IRAs or 401ks were not required to take any distributions. However, many retired people require income from these accounts, and major stock indexes were down over 30 percent at one point. Congress did not want to penalize retirees by forcing them to sell during a market crash. This helped individuals that don't need the income from these accounts immediately. However, those that depend on these distributions couldn't even use these benefits lest they sacrifice their income.
- The limit for deductions on federal tax returns is typically 60 percent of adjusted gross income for charitable contributions, but the CARES Act made the limit 100 percent in 2020. The Tax Policy Center (TPC) estimated that 66 percent of people who donated more than 60 percent of their AGI in the past had an income greater than $100,000. “Most of the value of the deduction goes to just a small number of the very wealthy,” said the TPC. This provision was intended to incentivize people to increase their charitable donations.
- Pass-through entities allow individuals to use paper losses to offset income that was taxed in previous years. 82 percent of these benefits will go to 43,000 taxpayers with $1 million or more in annual income. This provision accounts for more than half, $140.61 billion, of the $257.95 billion cost to taxpayers.
- Corporate interest deductions are the fourth provision and allow companies to deduct 50 percent of EBIDTA. This is a relatively small contributor, $12.09 billion, to the outstanding balance of $257.95 billion but still costs taxpayers billions.
- The last and second-largest provision deals with corporate loss treatment. This provision allows corporations to carry losses from previous years forward to income. This will benefit companies that are expected to report massive losses, such as Boeing. Furthermore, these companies can get refunds of up to 35 percent of their losses back to 2017 despite the corporate tax rate only being 21 percent. This will cost US taxpayers $88.7 billion.
The US is struggling. 100,000 people are dead, unemployment levels are the worst since the Great Depression, and much of the country is protesting in streets for systematic reform amid a global pandemic. But somehow, as the country is in turmoil, the rich are getting richer, and the poor are getting poorer.