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Poiuyt

(18,087 posts)
Sat Mar 28, 2020, 05:49 PM Mar 2020

**Surprise! The stimulus bill includes a tax break for the 1%

Thanks to a stunning new report from the New York Times, which has been relentless on the tax beat during the Trump administration, we've learned that a provision has been included in the 880-page coronavirus stimulus bill to help the very wealthy in a way that is breathtaking in its scope and detail.

-snip-

Now here is what changed in the historic $2 trillion stimulus bill. Previously, if a married couple had depreciation deductions that exceeded their real estate business income, the couple could claim that "loss" to write off taxes on a maximum of $500,000 in income from other sources, like wages from a day job.

Under the change, our rich taxpayer couple -- and this applies only for individuals, not corporations -- can now deduct an unlimited amount of "excess losses" in real estate against income from other sources. So now real estate moguls with lucrative day jobs or bountiful capital gains from other investments can go back to living tax-free, the Kushner way, before limits were put in place as part of the 2017 tax reform bill.

It gets worse, if that's possible. The change applies to this year -- and retroactively to 2019 and 2018. This means rich people can file amended returns now, and get refunds of perhaps millions of dollars, sooner than we can produce the number of ventilators we might need for the coronavirus crisis.
Let's pause for a moment to review: The new relief provision only benefits those who can list more than $500,000 in excess business losses -- typically artificial losses from depreciation that have more than wiped out their business income on paper -- AND more than $500,000 in other income from wages or other sources now that the cap on the tax break has been removed. Pity such people in a time of pandemic? Congress did.

Who are they? The Times and other accounts refer to this category as the "top 1%" of taxpayers, according to Internal Revenue Service data. These are people who are likely making millions, writing off millions more in paper real estate losses, all the while really hating the taxes they must pay.

https://www.cnn.com/2020/03/28/opinions/stimulus-bill-tax-break-for-1-mccaffery/index.html

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**Surprise! The stimulus bill includes a tax break for the 1% (Original Post) Poiuyt Mar 2020 OP
k&r for exposure. n/t Laelth Mar 2020 #1
The goal of the stimulus is to mitigate bad effects from the government-ordered shutdown. Igel Mar 2020 #2
This New Rule is a Big Give Away but It Will Also Help Millions of Folks Who Aren't Millionaires Indykatie Mar 2020 #3

Igel

(35,197 posts)
2. The goal of the stimulus is to mitigate bad effects from the government-ordered shutdown.
Sat Mar 28, 2020, 06:46 PM
Mar 2020

One of those is a reduction in income, right?

That's the whole extend unemployment insurance, keep people on the payroll, send them money idea.

One consequence of reduced income is that you can't pay your mortgage. So the feds have pushed the two federal mortgage agencies to work out a way to suspend payments for those laid off, and that's dominoed to other lenders. There are various things like this--like the IRS postponing tax filings and, consequently, tax payments.

One of the consequences of reduced earned income is that there's less income to use some earned deductions. That's where this comes in. You can still use the deduction, but against other incomes. It reduces the value of the deductions, I'm venturing, but there's still something.

And while it's probably mostly going to affect the top 1%, I can easily imagine others affected by this. But mentioning them and talking about them would reduce the injustice over their not suffering as much as they could.

Indykatie

(3,691 posts)
3. This New Rule is a Big Give Away but It Will Also Help Millions of Folks Who Aren't Millionaires
Sat Mar 28, 2020, 08:51 PM
Mar 2020

Before this change real estate losses were previously phased out if the individual income exceeded $150K. The losses are carried forth until a year when the person's income is below $150K or they sell the property. I have years and years of losses that have accumulated because of the rule. I can't believe they didn't at least keep some cap, maybe $500K on this tax giveaway. Making it retroactive to 2018 makes it even worse.

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