Friday, April 12, 2024

Financial Winner From the HEROES Act: Speaker Nancy Pelosi.

May 17, 2020 by  
Filed under Money/Business, News, Politics, Weekly Columns

( The 1800-page HEROES Act was passed along party lines on Friday in the House of Representatives, without hearings, without input from any Republicans and likely without meaningful input from most Democrats.

How striking is it that the HEROES Act includes the grand sum of $1,200 in aid for individuals who desperately need the funds because they lost their jobs due to the pandemic and simultaneously, with zero transparency, includes a reduction in federal income taxes over the next two years for the Speaker of the House of Representatives of an estimated $50,000?

It is instructive to read the two-page summary of the Democratic-proposed HEROES Act prepared by the House Committee on Appropriations. It is instructive less for the various items that are included in the summary; it is instructive for the items that are not mentioned in the summary. The House Committee of Appropriations makes no mention of the Heroes Act’s restoration of the individual tax deduction for State and Local Taxes (SALT) for 2020 and 2021.

In June 2019, the Tax Foundation provided an analysis to Congress regarding the impacts of restoring the deduction for state and local taxes. That analysis included two crucial facts: (1) 91 percent of the benefits of a restored SALT tax deduction would go to individuals earning over $100,000 per year and (2) The cost to the Treasury over the next decade would approximate $673 billion. It is, therefore, reasonable to assume that the Democratic-controlled House of Representatives is proposing about $135 billion in tax breaks over the next two years for individuals continuing to earn over $100,000 despite the pandemic

At a time when people are out of work, losing their businesses, spending their life savings and struggling with virtually every element of their lives, the House of Representatives voted to (1) provide relief in the form of $1,200 per person payments of up to $6,000 per family while (2) simultaneously reducing the federal income taxes of the those earning over $100,000 by an estimated $135 billion.

Members of Congress are not required and do not make their personal income tax returns public. Therefore, the impact of the HEROES Act to members of Congress includes speculation, but using the data supplied by USA Today in 2019 with respect to the net worth of individual members of Congress, anyone can make a fairly reasonable guess as to their annual income and annual income taxes. Should Speaker Pelosi care to correct any estimation of her annual taxable income, she need only release her tax returns.

It is reported that Speaker Pelosi and her husband have a net worth of at least $16 million. Both continue to work. Likely a low estimate, she and her husband should have taxable income from their vocations and their investments in each 2020 and 2021 approaching $600,000.  This would result in annual California income taxes of about $50,000. Add in $20,000 of property taxes and the speaker is awarding herself an additional $70,000 of tax deductions in each 2020 and 2021. That would result in a reduction to her personal federal income taxes of about $50,000 over the two years

$1,200 for Martha who works as a hair salon stylist and $50,000 for the Speaker of the House. And the Speaker of the House of Representatives continues to receive a salary check every month.

Speaker Pelosi’s neighbors, Senator Feinstein and Representative Khanna, would likely have their combined federal taxes reduced by as much as $425,000 for 2020 and 2021 combined.

Writing 1800-page bills without hearings and giving members of the House of Representatives as well as the general public less than a week to review and comment is a travesty. In the midst of a pandemic destroying the economy and putting record numbers on unemployment, including a provision that essentially only benefits Americans still earning over $100,000 is both callous and insensitive. Not including any comment in summaries of the proposal that would benefit the Speaker of the House of Representatives by an estimated $50,000 is nothing less than abhorrent.

Columnist; Hank Adler


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