Hmm. Who should we crack down on? Rich cheats or Welfare Moms?
What a silly question.
Prosecute the Poor and Protect the Profiteers.
That's the good old American Way!
Carl Jarvis
On 10/20/21, Miriam Vieni <miriamvieni@xxxxxxxxxxxxx> wrote:
Democrats Back Down on Plans for a Crackdown on Wealthy Tax Cheats
Alan Rappeport and Jonathan Weisman
/
Political Diplomacy
Democrats Back Down on Plans for a Crackdown on Wealthy Tax Cheats
Senators Elizabeth Warren and Ron Wyden in July. On Tuesday, they unveiled
a
revised Democratic plan for bank reporting requirements to the I.R.S.
(photo: Stefani Reynolds/NYT)
20 October 21
Senate Democrats on Tuesday, bowing to an aggressive lobbying campaign by
the banking industry and pushback from Republicans, scaled back a Biden
administration plan for the Internal Revenue Service to try to crack down
on
tax cheats.
The new proposal, which would help pay for the expansive social policy and
climate change bill that includes it, narrows the scope of information that
banks would have to provide to the I.R.S. about customer accounts. Under
the
revised plan, which is backed by the Biden administration, banks would be
required to provide data on accounts only with total annual deposits or
withdrawals worth more than $10,000, rather than the $600 threshold that
was
initially proposed. The reporting requirement would not apply to payroll
deposits for wage and salary earners or to beneficiaries of federal
programs
such as Social Security.
The plan was narrowed after a steady lobbying campaign by banks and a
barrage of criticism from Republicans, who argued that the administration's
desire to bolster the I.R.S. to shrink the $7 trillion "tax gap" amounted
to
an invasion of privacy and government overreach.
Senators Ron Wyden of Oregon, chairman of the Finance Committee, and
Elizabeth Warren, Democrat of Massachusetts, accused detractors of lying to
protect affluent tax cheats. But their decision to pull back the initial
proposal showed how legislation containing measures that Democrats believed
only weeks ago would be politically unassailable - from cracking down on
rich tax scofflaws to allowing the government to negotiate lower drug
prices
- could succumb to challenges from well-financed opponents. With no votes
to
spare in an evenly divided Senate, opponents need to change just one vote
to
doom a provision in the social policy bill.
Critics of the proposal have incorrectly suggested that the I.R.S. would be
tracking information about individual transactions. The administration has
said the I.R.S. would not monitor specific customer transactions but
instead
use the account information to spot discrepancies between it and what
individuals reported on their tax returns.
"Banks and their wealthy clients are outright lying, saying they would see
individual transactions, and Republicans are backing them up," Ms. Warren
said.
The Biden administration insists that audit rates for those making less
than
$400,000 would not go up and that the program was focused on collecting
unpaid taxes from the rich.
But Republicans, who have expressed distrust of the I.R.S. for years,
continued to criticize the proposal as an invasion of privacy. It is
familiar ground. In the 1990s, Republicans orchestrated well-attended
hearings on I.R.S. abuse that portrayed the agency as out of control. In
2013, Republicans accused the I.R.S. of targeting conservative groups,
although the political targeting crossed party lines.
"Whether it's $600 or $10,000, under this proposal, the intimate financial
details of everyone in this room - at a minimum, of every American who has
a
job - will be turned over on a daily basis to the I.R.S.," Senator John
Kennedy, Republican of Louisiana, told reporters, despite the proposal's
exemption of payroll deposits. "What could possibly go wrong?"
Senator Kevin Cramer, Republican of North Dakota, warned darkly, "Marx is
at
the doorstep."
Mr. Wyden called the Republican accusations a flat-out "lie" promulgated by
lawmakers at the behest of "donors and allies" who "want nothing more than
a
crippled I.R.S. unable to go after their cheating." Under the revised plan,
instead of daily transaction reports, banks would send "two numbers once
per
year," Mr. Wyden said, "the total amount going into an account, and the
total amount going out of it."
But the campaign has taken its toll. The Treasury Department said the Biden
administration would back the narrower proposal because the I.R.S. already
had information about American workers and retirees. While it would give
the
agency visibility into far fewer bank accounts, the Treasury said in a fact
sheet on Tuesday that "only those accruing other forms of income in opaque
ways are a part of the reporting regime."
"Today's new proposal reflects the administration's strong belief that we
should zero in on those at the top of the income scale who don't pay the
taxes they owe, while protecting American workers by setting the bank
account threshold at $10,000 and providing an exemption for wage earners
like teachers and firefighters." Treasury Secretary Janet L. Yellen said in
a statement.
"The main reason Republicans have latched on to this issue as the one to
lie
about every day is because they know their tax agenda is a political
loser,"
Mr. Wyden said. "The American people overwhelmingly want to ensure
megacorporations and billionaires pay their fair share, so Republicans have
largely given up on their tired trickle-down arguments."
Banks already submit tax forms to the I.R.S. about the interest that
customer accounts accrue. But the new proposal would require them to share
information about account balances so the I.R.S. can see if there are large
discrepancies between the income that people and businesses report and what
they have in the bank. The I.R.S. could investigate the gaps to see if
those
taxpayers were evading their obligations.
The Treasury Department has estimated that its original proposal to require
banks to report account balances, along with plans to beef up the
enforcement staff at the I.R.S., could raise $700 billion over a decade.
In a letter to House Democrats last month, Ms. Yellen urged lawmakers not
to
water down the information-reporting proposal. Originally, that part of the
plan was projected to raise $460 billion over a decade. The Treasury
Department estimated that the narrower plan that Congress had been
considering could raise between $200 billion and $250 billion over that
time.
The department believes that those are conservative estimates and that the
"deterrent effects" of the policies could still generate $700 billion of
additional tax collection in the next decade.
Republicans continued to raise the possibility that any new reporting rule
would expand to target lower-income taxpayers. Senator Michael D. Crapo of
Idaho, the ranking Republican on the Finance Committee, pointed to an
analysis by Congress's nonpartisan Joint Committee on Taxation that
estimated that half the unpaid taxes came from taxpayers making less than
$50,000 a year.
Taxpayers earning at least $500,000 are hiding only 4 percent to 9 percent
of the money that could be recovered by a crackdown in tax cheating, Mr.
Crapo said.
Mr. Wyden said that analysis was dated and was crippled by the committee's
inability to track how much money was owed to the I.R.S., especially by
those using complicated tax schemes like multilayered partnerships and
multiple bank transactions, which the new reporting requirements would
target.
He cited testimony on Tuesday by the deputy Treasury secretary, Wally
Adeyemo, who estimated that the wealthiest 1 percent of taxpayers will fail
to pay more than $2 trillion in taxes that they owe over the next 10 years.
