Interesting, so how are the loans being treated right now then, is it baked into the Revenue Rulings?
Are they deductible to decrease tax burden for employers and without discretion on the personal income of the owner/employer and some party is telling the IRS to kick rocks?
Technically speaking very few people have filed a tax return with PPP forgiveness on it. Several trade groups are telling the IRS to kick rocks and it would appear that Congress is as well.
Not that this will happen, but I assume this is in the spirit of the opinion on the deduction topic that kicked this off, wonder what the reaction would be if the median income of a US worker is deemed to be allowed to be deducted (~36k USD), or some multiple like 2x. I don't know for certain, but I think the overall point being made in that article was that the loans were to keep employees with a paycheck, but not necessarily to ensure an owner's wage was fully secure (ie the 1%er comment).
I think we may be talking past each other here on the mechanics of how this all works. The employee's wage is only being deducted once.
Business received the PPP funds as cash and paid their fixed costs (or were supposed to) as normal - payroll or rent is still being only deducted once hopefully as if it were a normal year. The idea being that instead of sending that cash back to the bank in the form of repayments the loan is forgiven. Not to get any further in the weeds than I already have but this is normally called forgiveness of debt income. This income, if taxable, would offset payroll costs so if this was a typical year you would have business owners having a higher taxable income than normal.
The idea for not making the forgiveness taxable is that we are not punishing business owners for accepting the loans and keeping their workers hired. If the forgiveness is taxable they would have been wiser to lay off those workers (from a practical standpoint.. not a moral one).
Again this is all great in theory but there was no real means testing on PPP loans and they were abused all over the place, but they also helped millions of businesses! The opinion of the article you linked seemed to be that high net worth individuals used it to pay themselves, which is absolutely possible and probable, but like the stimulus checks sometimes you have to open yourself up to that risk in the spirit of urgency and just hope you helped more small businesses than abusers of the system. Making it taxable punishes the abusers, but also the small businesses.
