The House passed on a 214-207 vote a revamped bill to provide COVID-19 relief with a controversial provision limiting the ability to carry back net operating losses.
Democrats decided to forge ahead October 1 with the updated version of the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 925) without striking a deal with congressional Republicans or the White House.
House Speaker Nancy Pelosi, D-Calif., told reporters that the administration objected to reducing the number of years a corporation can carry back NOLs.
The updated HEROES Act, as in the original version, would permit a company’s losses from 2019 and 2020 to be carried back only to January 1, 2018, instead of the five years allowed in the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136).
Pelosi said there was also pushback from Republicans over long-standing Democratic proposals to expand and improve the earned income tax credit and make the child tax credit fully refundable.
Pelosi said the disagreement is not just over cost, but is also a “values debate.” House Ways and Means Committee Chair Richard E. Neal, D-Mass., told reporters that Mnuchin is “dug in” on the NOL issue but that Pelosi knows where Democrats stand on paring it back.
Democrats in both chambers, led by House Ways and Means Committee member Lloyd Doggett, D-Texas, complained that the HEROES Act would affect very few Americans and would extend the generous tax cuts already received by the country’s richest. Republicans, on the other hand, said it would create another tax hike on small businesses during the pandemic.
While Democrats have long been trying to expand the EITC and make the child tax credit fully refundable, Republicans have criticized the idea of tying those provisions to the pandemic.
“What should they be tied to?” Neal asked rhetorically.