In Letter, MSCI Opposes Retroactive Federal Tax Increase
As several news outlets reported last week, some federal lawmakers are hoping to include a significant rollback of net operating loss (NOL) relief in the next COVID-19 bill.
Lawmakers passed NOL relief last spring in an effort to help businesses suffering losses because of the pandemic. Specifically, under the CARES Act, companies with losses from 2018, 2019, and 2020 can carry these losses back for the five previous years and have the losses offset up to 100 percent of taxable income.
Now, some members to Congress want to limit carrybacks of businesses’ 2020 losses from five to only two prior tax years, while also limiting the amount of relief for pass-through companies.
The NOL provision has provided important liquidity support, especially for small and medium-sized manufacturers and metals companies, during the pandemic. Eliminating or reducing it could make it more challenging for MSCI members to keep workers on the payroll and stay in business. Changing the provision also would amount to a major retroactive tax increase on businesses and workers that are critical to the country’s pandemic response.
As such, last week MSCI joined with nearly 100 other organizations to send a letter to leaders on the U.S. Senate Finance Committee asking them to preserve NOL relief. The letter, available here, noted, “NOL relief enjoys a longstanding history of bipartisan support during economic crises. The ‘alternative’ bill authored by Speaker Nancy Pelosi last spring included five-year carrybacks of net operating losses, as did the Worker, Homeownership, and Business Assistance Act of 2009, the Gulf Opportunity Zone Act of 2005, and the Job Creation and Worker Assistance Act of 2002. All of those bills were supported by bipartisan coalitions and were adopted by the House and Senate with overwhelming majorities.”
Stay tuned to Connecting the Dots for more information as this story develops.