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Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

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Illustration: Aïda Amer/Axios

Large companies have started pocketing billions of taxpayer dollars thanks to tax breaks tucked into the federal coronavirus stimulus.

Why it matters: Corporations are getting sizable, multiyear cash benefits, while most Americans received one-time, $1,200 checks to offset the economic turmoil and mass unemployment arising from the pandemic.

Details: Congress created several sizable tax provisions for companies in the main coronavirus aid package, especially these three:

  • Net operating loss carryback: Companies can take any operating losses they recorded in 2018, 2019 and 2020 and apply them to any of the previous five years to offset profits — in essence, they would be recouping taxes they already paid.
    • President Trump's tax cuts eliminated these so-called loss "carrybacks" as a way to pay for the slashed corporate tax rate.
  • Business interest expense deduction: The amount of interest that companies could deduct on tax forms previously was capped at 30% of adjusted profits, and Congress raised that limit to 50%.
    • This benefits companies that sit on a lot of debt, especially those backed by private equity firms, which often pile debt on.
  • Employee retention tax credit: Companies that continue to keep people employed during the pandemic get a 50% tax credit to subsidize their workers' wages, up to $5,000 per worker.

Together, companies will reap more than $155 billion from these three provisions this year and in 2021, according to estimates from the Joint Committee on Taxation.

  • These tax changes, especially the rules around net operating losses, are "incredibly impactful," said Chris Bell, a tax expert at accounting firm Moss Adams.

Between the lines: Those windfalls have started appearing in companies' first-quarter financial disclosures. The Wall Street Journal first reported some of the early gainers, and Axios has found others:

Transportation
  • Boeing registered an $862 million tax refund in the first quarter almost entirely due to the new operating loss carryback rule.
  • Airlines also recorded large tax refunds — $649 million for American, $50 million for Southwest and $47 million for Spirit — largely because they were able to carry losses backward.
Health care
  • Community Health Systems, a hospital chain that has struggled in recent years, pocketed a $183 million tax refund in the first quarter and registered a $0.15 per-share profit almost entirely because of these new tax changes.
  • Another hospital operator, Tenet Healthcare, registered $91 million in new tax benefits, mostly due to the higher interest expense deduction.
Retail
  • Business at restaurants, clothing stores and other retailers started coming to a standstill by the end of March, resulting in both large losses and large tax breaks.
  • Tax refunds totaled $163 million at Ross Stores, $60 million at Children's Place, $64 million at Dick's Sporting Goods and $20 million at Bloomin' Brands — a majority of which was due to loss carrybacks.

The big picture: The tax breaks were supposed to help ease companies' red ink and keep paychecks flowing for workers. But most of the companies mentioned above, for example, have either furloughed employees or are pushing for buyouts.

What to watch: The Congressional Budget Office "anticipates an increase in corporate tax refunds over the remainder of the year, resulting from the CARES Act's temporary modifications to the treatment of net operating losses."

Go deeper

Sep 25, 2020 - Health

Florida fully lifts coronavirus restrictions on restaurants

Photo: Don Juan Moore/Getty Images

Florida Gov. Ron DeSantis (R) announced Friday the state will completely reopen its economy, allowing restaurants to operate at full capacity and barring localities from ordering businesses to close.

Why it matters: The state became one of the world's epicenters for the virus in July, forcing DeSantis to pause its first round of reopening.

Updated Nov 26, 2021 - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Vaccines: U.S. to mandate vaccines for anyone who crosses borders starting in January — Shots lagged data by months — The next big bottleneck in the global vaccination effort.
  2. Health: The Thanksgiving bouncers — Axios-Ipsos poll: Thanksgiving roulette — Experts criticize CDC's language on vaccine boosters — America's Thanksgiving gamble.
  3. Politics: Biden administration asks appeals court to reinstate vaccine mandate — Michigan recommends face masks for all residents amid surge.
  4. Education: A COVID strategy backfires at schools — Schools across the U.S. offer vaccine drivesBenefits of in-person school outweigh risks, study finds.
  5. World: EU drug regulator recommends Pfizer COVID vaccine for kids — Italy announces new COVID restrictions for unvaccinated people — European health agency urges expanding booster shot access.
  6. Variant tracker: Where different strains are spreading.

Trump can't quit mainstream media

Bob Woodward and Robert Costa are interviewed by Chuck Todd on "Meet the Press" in September. Photo: William B. Plowman/NBC via Getty Images

Bob Woodward and Robert Costa issued a rebuttal on Friday to a statement by former President Donald Trump that misrepresented their reporting — and once again showed the 45th president's thin skin about mainstream media.

Driving the news: "Former President Trump said ... our book, 'Peril,' implied that he was planning to go to war with China," the statement begins. "[W]e report that Chairman of Joint Chiefs Mark Milley 'believed that Trump did not want a war' before or after the 2020 election."