Republicans in recent days have ramped up their criticism of a proposal under discussion by Democrats to increase the amount of information financial institutions report to the IRS about bank accounts.
Democrats are considering such a proposal as a way to help pay for their massive social spending package, though they have not finalized details. The plan under discussion would strengthen tax enforcement against the wealthy, Democrats argue.
Republicans, who have long been critical of the IRS, say that approach would amount to an invasion of privacy.
In a speech on the Senate floor Tuesday, Senate Minority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellRepublicans seem set to win the midterms — unless they defeat themselves Graham emerges as go-to ally for Biden's judicial picks Five reasons for Biden, GOP to be thankful this season MORE (R-Ky.) called the idea an “absurd new IRS spying provision.”
That same day, McConnell wrote in an op-ed in the Courier Journal, a newspaper in Louisville, Ky., that the plan offered by President BidenJoe BidenSouth Africa health minister calls travel bans over new COVID variant 'unjustified' Biden attends tree lighting ceremony after day out in Nantucket Senior US diplomat visiting Southeast Asia to 'reaffirm' relations MORE would create “a massive new dragnet that would sweep up all kinds of ordinary transactions that normal, law-abiding Americans make routinely.”
The Wall Street Journal editorial board also took aim this week at the IRS reporting proposal, calling it a “privacy breach waiting to happen.” The editorial board referenced how confidential tax information on wealthy Americans was provided to the investigative news outlet ProPublica. Federal agencies are still investigating the matter.
The Biden administration earlier this year proposed requiring financial institutions to report on annual IRS forms the aggregate inflows and outflows for bank accounts, in cases where accounts have flows above $600. The administration has estimated that the proposal would raise about $460 billion over the next decade through enforcement.
Democratic lawmakers are considering including a provision on bank reporting requirements in their social-spending package, though it is unlikely to match the administration’s proposal. The legislation advanced by the tax-writing House Ways and Means Committee last month did not include a provision on reporting requirements. Following the markup, Democratic lawmakers reached a tentative agreement to raise the threshold from $600 to $10,000 and exclude regular wage payments.
Republicans, however, have focused on the $600 figure.
In addition to writing opinion pieces, Republicans have also criticized the proposal in recent congressional hearings.
“There are obvious privacy concerns for all Americans here, and this represents a dramatic new regulatory burden for community banks and credit unions,” said Sen. Cynthia LummisCynthia Marie LummisHoliday season poses major test for Biden economy On The Money — Biden caps off infrastructure week Senate Republicans call on colleagues to reject government spending bills without border wall funding MORE (R-Wyo.) in a Senate Banking Committee hearing last week.
Democrats have defended the bank-reporting idea.
Treasury Secretary Janet YellenJanet Louise YellenBlowing up the Death Star would cause an economic crisis (and other reasons employers shouldn't pay off workers' college debt) Buttigieg has high name recognition, favorability rating in Biden Cabinet: survey Biden's spending binge makes Americans poorer, just before the holidays MORE replied to Lummis by saying the proposal wouldn’t require banks to provide detailed information about transactions to the IRS, and that the proposal is focused on narrowing the “tax gap” between the amount of taxes paid and the amount owed.
Senate Finance Committee Chairman Ron WydenRonald (Ron) Lee WydenDemocrats plow ahead as Manchin yo-yos Overnight Energy & Environment — House passes giant climate, social policy bill Senate confirms Park Service director after years of acting heads MORE (D-Ore.) made similar comments in a statement provided to The Hill.
“Under this proposal, a bank would report just two numbers to the IRS--not individual transactions. The IRS will not know what taxpayers are purchasing,” Wyden said. “This proposal is about going after tax cheats who are putting more and more of the tax burden on wage earners who follow the rules.”
In addition to the Biden administration proposing increasing bank-reporting requirements, the White House and Democratic lawmakers have called for providing the IRS with an additional $80 billion over a decade for enforcement and modernizing information technology. Republicans have bashed that proposal as well.