Key Takeaways
- • Real estate industry lobbyists secured two tax provisions in the $2 trillion CARES Act worth an estimated $160 billion in tax breaks, disproportionately benefiting wealthy investors, hedge funds, and real estate speculators.
- • The provisions remove caps on individuals' and businesses' ability to write off net operating losses, allowing certain investors to shift losses to prior tax years and substantially reduce their tax liabilities.
- • The National Multifamily Housing Council (NMHC), representing the apartment industry, spent $1.4 million in Q1 2020 on lobbying efforts and explicitly targeted these tax provisions, with Kushner Companies listed as a member of its advisory committee.
- • House Democrats passed a largely symbolic bill on May 15, 2020, to roll back both controversial provisions, though the measure was expected to face Republican opposition in the Senate and die without passage.
- • The provisions originated from Senate Finance Committee Chairman Chuck Grassley's office working with other Republicans on the committee, with no bipartisan support for the Democratic repeal effort.
Summary
The real estate industry successfully lobbied Congress to insert two substantial tax breaks into the CARES Act, the $2 trillion emergency stimulus package passed in March 2020 with overwhelming bipartisan support. According to TIME's analysis of bill drafts and lobbying disclosures, these provisions—which eliminate caps on net operating loss deductions—are projected to deliver a $160 billion windfall overwhelmingly to wealthy Americans, with particular benefits flowing to real estate investors and hedge fund managers.
The controversial provisions allow high-income business owners to deduct losses from prior tax years, effectively enabling certain investors to shift losses backward and substantially reduce their cumulative tax obligations. While House Democrats attempted to reverse these provisions through a bill passed on May 15, 2020, the repeal effort faced near-certain defeat in the Republican-controlled Senate, where it lacked support.
The National Multifamily Housing Council (NMHC), a prominent real estate trade association representing the apartment industry, played a central role in advancing these provisions. The NMHC spent $1.4 million during the first quarter of 2020 on lobbying across multiple power centers, including Congress and the Executive Office of the President, and explicitly listed one of the two tax provisions among its lobbying targets. Kushner Companies, the real estate firm controlled by Jared Kushner's family, held membership on the NMHC's advisory committee at the time, with Avi Lebor, the company's director of acquisitions, listed as the membership contact.
TIME's investigation traced the provisions' origin to Senate Finance Committee Chairman Chuck Grassley's office, which coordinated with other Republican committee members on the measures. The successful insertion of these provisions into an emergency stimulus bill designed to address the COVID-19 pandemic illustrated how industry groups can leverage crisis legislation to advance tax preferences for narrow constituencies.
The controversial provisions allow high-income business owners to deduct losses from prior tax years, effectively enabling certain investors to shift losses backward and substantially reduce their cumulative tax obligations. While House Democrats attempted to reverse these provisions through a bill passed on May 15, 2020, the repeal effort faced near-certain defeat in the Republican-controlled Senate, where it lacked support.
The National Multifamily Housing Council (NMHC), a prominent real estate trade association representing the apartment industry, played a central role in advancing these provisions. The NMHC spent $1.4 million during the first quarter of 2020 on lobbying across multiple power centers, including Congress and the Executive Office of the President, and explicitly listed one of the two tax provisions among its lobbying targets. Kushner Companies, the real estate firm controlled by Jared Kushner's family, held membership on the NMHC's advisory committee at the time, with Avi Lebor, the company's director of acquisitions, listed as the membership contact.
TIME's investigation traced the provisions' origin to Senate Finance Committee Chairman Chuck Grassley's office, which coordinated with other Republican committee members on the measures. The successful insertion of these provisions into an emergency stimulus bill designed to address the COVID-19 pandemic illustrated how industry groups can leverage crisis legislation to advance tax preferences for narrow constituencies.
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