April 20, 2020

Reader Carol wrote in to ask about a story in the U.K. DAILY MAIL that criticized a tax provision in the “CARES” Act as a giveaway to the rich. Specifically, it said that 80 percent of the benefit would go directly to millionaires and billionaires, including Jared Kushner and others in the “Trump circle.”

Not surprisingly, a review of the DAILY MAIL report showed it had no balance, no commentary from anyone on the other side of this issue. And predictably, the story was picked up by other left-leaning sites that presented the same simplistic take-away; namely, that the Republicans had added this provision to further enrich their “rich friends.” It took some looking, but we found an analysis in a more conservative news outlet, THE FEDERALIST, from Kyle Sammin, that took exception to this conclusion.

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The headline and subhead sum it up: “No, Boosting Small Business Isn’t Rich People ‘Looting’ Taxpayers: Far from a handout to rich guys, a small change under the coronavirus stimulus package reduces taxes on business owners so they can retain employees on payroll.” It cites Jeff Stein at the WASHINGTON POST for using the tired media narrative that Republicans care only about rich people while failing to explore the reasons Democrats went along with this (they voted for it, you know). “As usual,” Sammin writes, “there is more to the story than the class warfare angle.”

The way Sammin explains it, this is “far from a naked handout to rich guys.” The tax incentive was added because of a change that had been made in the tax law in 2017 regarding the way small business tax losses are treated. The reason taxes on business owners (those “millionaires and billionaires”) have been reduced is to make it easier to retain workers on payroll while they’re shut down. It does not apply to personal income taxes.

It also doesn’t apply to huge, publicly-traded corporations, he says, but to smaller businesses that are organized for tax purposes as “tax-throughs.” We’re talking about proprietorships, partnerships, LLCs, and subchapter S corporations, whose profits are taxed at the individual level, not the corporate level. According to Sammin, about 95 percent of all businesses in America are organized this way.

This is your locally-owned neighborhood hair salon, family-owned restaurant or clothing boutique that has been hard-hit by the quarantine. In parts of the country with a mid-to-higher cost of living, especially, these business owners are going to be in the “millionaire” category, and these are the people –- along with their employees –- who are holding on for dear life.

The tax change in 2017 meant that, starting in 2018, small businesses couldn’t write off more of a loss than $250,000, or $500,000 if it was owned by a married couple. At that time, people who lost that kind of money tended to be disproportionately wealthy. But now, many more small businesses will show a loss like this, which means they have to cut pay or lay off employees altogether. This provision in the CARES Act was intended to lighten the load on these small businesses. “Like most tax incentives,” Sammins writes, it is not perfect, but it should be marginally effective in helping all workers, not just the rich.”

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Yes, some of these small businesses are owned by quite wealthy people. Democrat Sen. Sheldon Whitehouse of Rhode Island, who did vote for the bill, complained, “It’s a scandal for Republicans to loot American taxpayers in the midst of an economic and human tragedy.” He’s hoping you don’t think too deeply about this and realize that it’s not “looting” to let small businesses write off their actual losses, especially at a time when they are faced with the very real possibility of losing it all.

As long as we’re looking at the CARES Act, here’s a less shall-we-say “charitable” look at the possible unintended consequences. It explains how the program is vulnerable to waste, fraud and abuse. (To that I would say, well, yes...isn’t every government program?) As Gary Meltz writes in the WASHINGTON EXAMINER, “These are honest and legal ways the PPP allows business owners who are not struggling due to the pandemic to make massive profits. Now think about the unethical and illegal methods that probably also exist.” To give the complete picture, I’ve included that take here:

The law has loopholes that allow larger businesses such as large restaurant chains to take advantage. For example, as Dominick Mastrangelo reports in the WASHINGTON EXAMINER, an exemption in the CARES Act allows food industry businesses to obtain loans as long as no more than 500 employees work at a single location. (I could argue, though, that it might be just as challenging, perhaps in different ways. to keep a big chain of restaurants afloat as it is to sustain a single restaurant or small regional chain.) Also, the law does not specifically prohibit aid from going to publicly listed firms.

Keep in mind that while we’re talking about this, Chuck Schumer and Nancy Pelosi are holding off their approval of a bill to replenish by $250 billion the Paycheck Protection Program (PPP) for small business loans, which in just two weeks was drained of its original $350 billion. This lack of money could affect hundreds of thousands of businesses. Again, this bill is another effort to help businesses keep people employed while they are unable to make payroll. Democrats are trying to inflate the bill to $500 billion –- for hospitals, food assistance and first responders –- and are delaying its passage.

They should go forward with this NOW and take up other funding in a separate bill. Stop bickering and playing politics; Congress has the “power of the purse” and could introduce additional legislation and debate the details of that funding separately rather than hold this bill hostage.

I would add that OF COURSE any funding bill designed to help desperate small businesses could end up benefiting some people who are wealthy –- including some who are disliked for partisan reasons. Just speaking broadly, if a bill that’s going to provide critical relief to small businesses happens to have some benefit for, say, Jared Kushner, does that mean we’re going to go on the assumption that it was DESIGNED to help build Jared Kushner’s portfolio and summarily reject it, leaving small businesses to twist in the wind? Or, are we perhaps going to do some sort of carve-out so that the program benefits everyone EXCEPT Jared Kushner (and anyone else who might be in Trump’s “circle,” or even every rich Republican)? Leftists would love to do that, but there’s a word for it: unconstitutional.

By the way, Pelosi, in a Sunday interview with Chris Wallace in which she repeatedly noted how “nonpartisan” her colleagues are being on the issue of help for small business (!), still managed to finger-point at Trump and would give no Democrats any responsibility for the delay in funding. “He’s a poor leader,” she said of the President. “He’s always trying to avoid responsibility and assign blame.” Um, Nancy, isn’t that exactly what YOU are doing in this very interview?

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Comments 1-10 of 10

  • Amelia Little

    05/30/2020 02:46 PM

    For years, I have been moaning and complaining (to put it honestly) about passage of bills---that whatever the issue (in this case relief for the people) should included ONLY that issue, not every side issue someone can come up with, not some pork issue to give some congressman an "incentive" to pass a bill. That, in fact is how we got to the mess anyway, first time someone was offered some pork in a bill to get his vote--thereafter, it became known--hey!! This is how to get more of what YOU want (whether it is for that politicians constituents or for that politician personally) ONLY THIS ISSUE WILL BE ADDRESSED IN THIS BILL. You have other issues--go "sponsor" your only bill--again, addressing ONLY that issue.

    This would solve several problems that I see. First is--everyone would know exactly what the issue is, and how it is being handled. If there is only that one issue--makes the bill shorter, easier to read, not only by citizens, but also by politicians (their staff.) Oh, and BTW, just spit the words out, quit with all the legal double talk that even the authors of the bill don't understand. Second, there would be many pork issues which would actually be identified as something each state should address--one size does NOT fit all--some onerous regulations are put on states who are not affected by the issue--just affected by the "solution."

    And, it is laughable (sad, really) that democrats are saying the recovery bill isn't helping small businesses at all, only big businesses (wonder how much stock some of them have in those big businesses and really are not po'd at all?) YET, they wanted (and got) big bucks for the Kennedy Center, PBS, other BIG enterprises that aren't doing a damn thing to help alleviate the crisis.

  • Kathy Wilson

    04/21/2020 08:50 AM

    I would like to know where to find a list of all the pork the Dems put in the first stimulus bill. All I have heard about is the Kennedy Center. This list should be published prior to the elections so people see what the Dems are really about. Thank you.

  • Janet Pingston

    04/20/2020 09:31 PM

    Do you really think there is going to be any "evidence" that the Wuhan virus came from the lab? What do you think China has been doing ?

    Reader Digest Article - long time ago. 1990?? A doctor researcher had invented a blood like plasma transfusion for certain kinds of leukemia. He even had to use it himself. But it was
    shut down by the drug companies (lawsuits and lack of resource capital) because of course - it was not a drug. something to research

  • Patricia Scupien

    04/20/2020 04:18 PM

    Hi Governor Huckabee,

    I’m so glad you’re out there writing the truth. It blows my mind how gullible the followers of the Left are. They continue to spew out the lies of Nancy Pelosi and her the gang. But when you tell them (the Left supporters) what’s actually happening they get angry and call us names. How can they be so blind? Somehow their eyes need to be opened to what’s really going on, but how? God tells us to pray for our enemies so that’s what we should do. I sent an email to Nancy but, as expected, no reply. How can she lie straight into the camera? And, being a woman (of so called faith) support abortion? And just a side note, the women who march with signs that say “My body, my right” don’t they get that the baby, inside their body, ISN’T their body but a separate creation from God. It’s really their carelessness that got them pregnant. Why does the innocent, who has no voice of it’s own, have to pay? It makes me weep. End of rant and back to Nancy. How can she take communion or, better yet, her priest give communion to someone who promotes murder. Doesn’t one of the commandments say “Thou shall not murder”? I would hate to face God, at the end of my life, and he ask me why didn’t you save My babies? Why did you allow their life to be cut short? I had great plans for them. Anyway, I believe that the Left made a packed that should Trump win they would not support him in anything he does and give him grief every day of his presidency. I remember Trump saying once that he should have said he DIDN’T want the wall and they would have built it. Now that was funny! I would like to tell Nancy “give me a break Nancy. Grow up. You DO have an adult job. Who are you fighting for? Is it the American People or the selfishness of the Dems?

    I read your emails nearly every day. I love you and your daughter so much. You both are Godly people and speak the honest truth. Keep up the good work. You have a lot of supporters.


  • Pat J Green

    04/20/2020 03:43 PM

    I would not listen to anything Pelosi had to say, especially after her ice cream gate, kind of like Maria Antionate "let them eat cake"

  • Bruce Deming

    04/20/2020 03:40 PM

    I'm starting to think that the PPP loans are being manipulated on a partisan basis by local SBA offices. I'm in rural NY, and I have that funny feeling it went disproportionately to NYC, and other cities that are 90+% demonrats. I applied for my business on Tuesday April 14th, and there was still money in the system at that time. Now I'm getting the run around from my bank, saying it's still at the SBA, and the program is out of funds. The bank didn't get the forms until Monday April 13th. I can't get an answer as to when the bank got the app to the SBA or if it even needed to go there. I have no idea of where they sent it so I can't contact the SBA. I've asked several business owners in town and no one has received any loan from the PPP program.
    I really don't know what to do at this point, if I lay workers off, and the loan isn't forgiven, I would end up with a payment I don't know if I can afford in six months. The business will be out of capital in 2 weeks, and the only way I can keep it going fully staffed would be from my retirement account. In 9 days I'll be 61, basically unemployable for any decent job at my current salary.

  • Renea Hamilton

    04/20/2020 03:40 PM

    The Hilary-ity of it all is that the Democrats are also millionaire business owners. Anyone foolish enough to not realize that should never be allowed to vote.

  • judith jakub

    04/20/2020 03:34 PM

    You nailed with enlightening Pelosi, about HER "finger pointing". Kudos, Mr. Huckabee.

  • Lisa Ford

    04/20/2020 03:13 PM

    As a person who has seen not one penny of stimulus money. I blame it all on Nancy & Chuckie. As time goes by, I seriously doubt if there is even one democrat that can tell the truth or find one democrat that truly cares about we the people. They only care about filling their own wallets & to heck with us. If that ain't communism or socialism, I don't know what is. Let's vote out every democrat that we can come November. And keep voting them out after. There's not one that can be trusted!

  • Judith McCarthy

    04/20/2020 01:45 PM

    Mike, I am one of your biggest fans; however, I find the references to the Paycheck Protection Program (PPP) above to be tone deaf to what the true small business owner is experiencing.

    Supposedly the PPP was a first-come, first-served program to protect small companies and their employees. The way it is being administered is egregious if it is anything like what my 29 year old son experienced.

    He and a college roommate own a metal fabrication and welding business that they started in 2015. They had five employees.

    He applied to Pittsburgh National Corporation PNC, his banker, on the day that the program opened. Four days later, the banker at PNC contacted him to say that my son had not initialed the application in two places. He did so within three hours.

    When he did not hear back from PNC on the status of his application, he contacted the banker repeatedly. No response at all until last Thursday, April 16, 2020 when the banker contacted him and said that she had submitted his application that day at 12:30 pm. The money had run out.

    He had to furlough all of his employees. Now he is frantic to keep his business afloat.

    He submitted a complaint to PNC and the banker called and offered him a loan at 7%. He has avoided debt like the plague. He and his partner have paid themselves paupers wages believing that investing in equipment and good employees now would pay off in the future.

    If he had not acted in a timely manner, he would not be upset. BUT when he did everything in time to get a loan and the "big guys" get funding and you didn't, it feels like crony capitalism at its worst.

    Whom does he blame? Trump and Marco Rubio. Somebody had to write and approve the bill. He believes that they left loopholes for the banks and the connected.

    Below is a link to an article about my son. Scroll down for what he was trying to to do related to the virus.

    Judith McCarthy