The Biden administration is pressuring lawmakers to enact a plan requiring banks to turn over to the Internal Revenue Service detailed information about inflows and outflows of almost all American bank accounts.
Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig sent letters to lawmakers this week asking Congress to include in tax hike legislation a requirement that banks report annual transaction data on accounts with $600 or more or that have $600 worth of transaction over the year, the Wall Street Journal reported. The stated goal is to collect taxes from rich individuals and businesses on income that is earned but not reported.
The Biden administration claims the additional information would result in the IRS collecting an additional $460 billion over a decade. The administration wants to use this additional revenue to offset some of the new spending for expanded government social policies and green new deal schemes Congress is currently considering.
The proposal did not make it into the list of tax change proposals put together by House Democrats. The Wall Street Journal reported that absence is a sign that the proposal lacked support among Democratic lawmakers.
In a letter supporting the plan, Yellen argues that tax compliance is much higher when people know that the IRS has data on their income. In other words, even if the IRS cannot effectively analyze the data, just the fact that it has it might persuade Americans to report income that might have gone unreported.
“Wage and salary income is reported to the IRS on W-2 reports, and tax obligations are automatically withheld, so compliance rates stand at 99 percent,” Yellen wrote. “It is clear that when taxpayers know that this information exchange exists, their voluntary compliance rises.”
ARTICLE: PAUL MURDOCH
MANAGING EDITOR: CARSON CHOATE
PHOTO CREDITS: AMERICAN BANKER
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