Democrats’ Tax Plan Targets The Middle Class

An Analysis From The Joint Committee On Taxation Shows That Democrats’ Proposed Tax Increases Would Result In Taxpayers Who Make Less Than $400,000 Paying More In Taxes, Conclusively Violating President Biden’s Tax Pledge

According to an analysis from the Joint Committee on Taxation, in the first year following the passage of Democrats’ tax hikes, taxpayers in every income bracket would get a tax increase. (Joint Committee on Taxation, D-02-21, 9/22/2021)

SENATE FINANCE COMMITTEE REPUBLICANS: “In 2023, taxpayers of every income level will see meaningful tax increases, including:

• Nearly five percent of taxpayers earning between $40,000 and $50,000;
• Nine percent of those earning between $50,000 and $75,000;
• 18 percent of those earning between $75,000 and $100,000;
• 35 percent of those earning between $100,000 and $200,000; and
• 59 percent of those earning between $200,000 and $500,000.

These results conclusively show that Democrats are willing to violate President Biden’s pledge for tens of millions of hard-working Americans.” (U.S. Senate Finance Committee Ranking Member, Press Release, 9/24/2021)

SEN. MIKE CRAPO (R-ID), Senate Finance Committee Ranking Member: “The Tax Cuts and Jobs Act cut taxes across all income groups, especially for the middle class. This nonpartisan analysis shows that less than a third of all Americans will benefit from Democrats’ tax plans, with more than two thirds either experiencing no benefit or facing immediate tax hikes.  The middle class and small businesses in particular will be getting very little—except for more taxes.” (U.S. Senate Finance Committee Ranking Member, Press Release, 9/24/2021)

President Biden Repeatedly Pledged That ‘We Will Not Raise Taxes By One Cent On People Making Less Than $400,000 A Year’

PRESIDENT BIDEN: “[W]e’re not going to raise taxes on anyone making under $400,000…. [O]nly corporations and people making over $400,000 a year are going to pay any additional tax.” (“Remarks by President Biden on the Economy,” Washington, DC, 9/16/2021)

• BIDEN: “Here’s the thing you need to know: We’re going to deliver these investments without raising taxes one cent on anyone making less than $400,000 a year.” (“Remarks by President Biden on the August Jobs Report,” Washington, DC, 9/03/2021)

• BIDEN: “We’re going to do all of this by keeping my commitment. We will not raise taxes by one cent on people making less than $400,000 a year.” (“Remarks by President Biden on the Senate Passage of the Bipartisan Infrastructure Investment and Jobs Act,” Washington, DC, 8/10/2021)

• BIDEN: “[W]e’re going to do it without raising taxes by even one cent on people making less than $400,000 a year.” (“Remarks by President Biden on the July Jobs Report,” Washington, DC, 8/06/2021)

WHITE HOUSE PRESS SECRETARY JEN PSAKI: “Obviously, the President’s commitment remains not raising taxes for anyone making less than $400,000 a year.” (White House Press Briefing, 9/27/2021)

• PSAKI: “From Day One, the President has been clear that … he will not raise taxes on Americans who make under $400,000 …” (White House Press Release, 6/08/2021)

TREASURY SECRETARY JANET YELLEN: “No taxpayer earning under $400,000 will face a tax increase.” (“Remarks by Secretary of the Treasury Janet L. Yellen to the National Association for Business Economics,” 9/28/2021)

President Biden Is ‘Asking Congress To Enact A Sweeping New Law Requiring Financial Institutions To Report Gross Inflows And Outflows On All Business And Personal Accounts Above $600 To The IRS’

“President Joe Biden wants to boost the IRS budget by $80 billion over 10 years, mostly through mandatory funding that would flow automatically, to provide a sustainable budget that would allow the agency to step up its enforcement activities. The president is also asking Congress to enact a sweeping new law requiring financial institutions to report gross inflows and outflows on all business and personal accounts above $600 to the IRS. Treasury estimates that combined these proposals would narrow the tax gap of revenues owed but not paid and raise roughly $700 billion over 10 years.” (“Distrust Of IRS Drives GOP Critique Of Biden Tax Enforcement Plan,” Roll Call, 6/10/2021)

• “The proposal would require banks to report annual account inflows and outflows to the Internal Revenue Service. The requirement would also extend to peer-to-peer payment services such as Venmo…” (“Biden Tax Plan Leans on Banks to Help Find Unreported Income,” The Wall Street Journal, 4/29/2021)

BIDEN TREASURY DEPARTMENT PROPOSAL: “This proposal would create a comprehensive financial account information reporting regime. Financial institutions would report data on financial accounts in an information return. The annual return will report gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner. This requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts, with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600.” (“General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals,” Department of the Treasury, 5/2021)

The Biden Administration Is Aggressively Pushing Congressional Democrats To Include The $600 IRS Reporting Provision In Their Reckless Taxing And Spending Spree

“Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig pressed lawmakers… to give the Internal Revenue Service more information about taxpayers’ bank accounts, as the Biden administration tries to salvage its struggling tax-compliance proposal. In letters to lawmakers, the administration officials again asked Congress to require banks to report annual inflows and outflows from bank accounts with at least $600 or at least $600 worth of transactions, a proposal aimed at letting the IRS target its audits more effectively. It would generate about $460 billion over a decade to cover the costs of Democrats’ planned expansion of the social safety net and climate-change policies, according to the administration.” (“Yellen, IRS Push Democrats to Require Banks to Report Taxpayers’ Annual Account Flows,” The Wall Street Journal, 9/15/2021)

‘Requiring More Third-Party Reporting Would Ensnare Tens Of Thousands Of Small Fish In Hopes Of Catching A Whale. Banks And Platforms Like PayPal Could Be Conscripted As Tax Police’

THE WALL STREET JOURNAL EDITORIAL BOARD: “Mr. Biden’s plan would also upgrade IRS software and require banks and other third-parties to report more information on taxpayers. The former would be useful. But requiring more third-party reporting would ensnare tens of thousands of small fish in hopes of catching a whale. Banks and platforms like PayPal could be conscripted as tax police.” (Editorial, “Biden’s Stimulus For The IRS,” The Wall Street Journal, 5/03/2021)

SEN. MIKE CRAPO (R-ID), Senate Finance Committee Ranking Member: “Less noticed are some of the plans to drastically expand the powers of the Internal Revenue Service and turn banks and credit unions into private investigators for monitoring law-abiding Americans. This financial dragnet will force financial institutions into reporting deposit and withdrawal flows on as little as $600 in their customers’ accounts, exposing sensitive data to future breaches. Whether the cutoff for monitoring transactions is $600 or $10,000, Americans of all income levels would have their private financial activities reported to the leaky IRS. The threats to privacy and invasion of compliant taxpayers’ personal financial affairs are staggering.” (Sen. Crapo, Congressional Record, S6568, 9/21/2021)

SEN. CYNTHIA LUMMIS (R-WY), Senate Banking Committee Member: “Secretary Yellen, speaking of horrified, my constituents cannot believe that you support a proposal to require banks and credit unions to report customer data to the Internal Revenue Service for transactions of $600 or more. There are obvious privacy concerns for all Americans here, and this represents a dramatic new regulatory burden for community banks and credit unions in Wyoming and elsewhere. Our banks will have to hire contractors to rat on their customers, implement new computer software, deploy resources better used elsewhere in order to collect data for the government. Bank customers are not subject to the federal government. Banks do not work for the IRS. This is invasive of privacy. … I am astounded by what you’re supporting and proposing. I think it’s invasive. I think privacy for individuals is getting ignored. And I think treating the American people like they are subjects of the government is unconscionable.” (Senate Banking, Housing, and Urban Affairs Committee, Hearing, 9/28/2021)

Financial Institutions: ‘The IRS Has No Justifiable Right To This Data’, ‘Rather Than A Targeted Program, This Proposal Would Create A Dragnet, Collecting The Financial Information Of Most Americans And Requiring Significant Resources To Build, Police, And Maintain’

12 TRADE ASSOCIATIONS REPRESENTING BANKS, CREDIT UNIONS, AND RELATED FINANCIAL INSTITUTIONS: “On May 28th, 2021, the Administration released its fiscal 2022 budget proposal and related ‘Green Book’ At this time, we understand and appreciate there are not detailed official proposals on how the additional reporting requirements and related administration would work. That said, the limited additional information included in the Green Book suggests that this new regime could be exceptionally expansive and comprehensive, covering the accounts of most Americans, rather than only the ‘wealthiest,’ as described in the American Families Plan. …  This proposal will have real costs, not only for government, but also for financial institutions, small businesses, and individual taxpayers.” (12 Trade Associations Representing Financial Institutions, Joint Statement for the Record to the House Ways and Means Committee Hearing, 6/10/2021)

• “If enacted, this proposal would require financial institutions and other providers of financial services to track and submit information on every account above a $600 de minimis threshold. Rather than a targeted program, this proposal would create a dragnet, collecting the financial information of most Americans and requiring significant resources to build, police, and maintain. Policymakers must consider how account-holder data would be protected and whether a program of this scale and scope infringes on the American people’s reasonable expectation of privacy.” (12 Trade Associations Representing Financial Institutions, Joint Statement for the Record to the House Ways and Means Committee Hearing, 6/10/2021)

AMERICAN BANKERS ASSOCIATION AND 51 STATE BANKERS ASSOCIATIONS: “On behalf of the members of the American Bankers Association (ABA) and the undersigned State Bankers Associations, representing banks of all sizes in every state, we write to express concerns about a proposal included in the Administration’s American Families Plan that would create new tax information reporting requirements for financial institutions. We urge members to oppose any efforts to advance this significant new reporting regime for a number of reasons we detail below.” (American Bankers Association and 51 State Bankers Associations, Letter to Sens. Wyden and Crapo and Reps. Neal and Brady, 7/20/2021)

• “Although limited information is available, we understand this proposal would require financial institutions and other providers of financial services to track and submit to the IRS information on every account above a de minimis threshold of $600 of inflows and outflows during the year. This proposal would create a dragnet, collecting the financial information of most Americans and requiring significant resources to build, police, and maintain. Policymakers must consider how account-holder data would be protected and whether a program of this scale and scope infringes on the American people’s reasonable expectation of privacy. As noted in the Administration’s Tax Compliance Agenda, the IRS experiences 1.4 billion cyberattacks annually, has had multiple data breaches, and continues to deal with the fallout of identity theft and false tax returns. Adding an entirely new set of data may compound the IRS’s systemic problem and expose even more taxpayer data.” (American Bankers Association and 51 State Bankers Associations, Letter to Sens. Wyden and Crapo and Reps. Neal and Brady, 7/20/2021)

• In addition to the challenges associated with protecting this new data, policymakers should consider the potential unintended consequences of leveraging bank relationships to execute such a large-scale and detailed reporting regime. Privacy concerns are already cited as one of the top reasons that individuals choose not to open bank accounts. A reporting regime of this magnitude could exacerbate the wealth gap in this country by pushing those households on the cusp of banking services back into the unbanked and underbanked population.” (American Bankers Association and 51 State Bankers Associations, Letter to Sens. Wyden and Crapo and Reps. Neal and Brady, 7/20/2021)

REBECA ROMERO RAINEY, President & CEO of the Independent Community Bankers of America: “The Administration’s Greenbook proposal to require bank account reporting on all accounts with a gross flow threshold or fair market value of more than $600 is opposed by consumer groups, small business groups, and financial institutions of all charter types and sizes as intrusive and overreaching. … Community banks collect financial data for the purpose of serving their customers: to safeguard their funds, provide checking, card, and other payments services, and extend credit. The IRS has no justifiable right to this data. It is not and must not be a public good. This overreaching proposal would fundamentally redefine the relationship among financial institutions, their customers, and the IRS.” (Independent Community Bankers of America’s Rebeca Romero Rainey, Letter to Members of the United States Senate, 8/10/2021)

JIM NUSSLE, President & CEO of the Credit Union National Association: “In an effort aimed at increasing taxpayer compliance, the Administration has proposed that financial institutions be required to report additional account holder information in an enhanced annual I.R.S. Form 1099-INT. Banks, credit unions, and other entities would be required to annually report to the IRS the gross inflows and outflows of account holders (businesses and individuals) with a breakdown for cash, transactions with a foreign account, and transfers to and from another account with the same owner. CUNA remains concerned about the effect this proposed new requirement will have on credit unions. Privacy and data security are paramount issues. Whether it is the massive data breach at the federal Office of Personnel Management in 2014 or this year’s IRS leak of federal tax returns of many wealthy Americans, CUNA remains doubtful that such data will be safe and private. Credit unions and other financial institutions already churn out many federal tax information reporting forms. This new requirement further puts credit unions in the position of further policing their members and account holders. CUNA believes that better that better tax compliance can be achieved through other means such as the IRS using its existing audit authority. CUNA has significant concerns about this proposed new compliance burden.” (Credit Union National Association’s Jim Nussle, Letter to Mike Crapo, 7/26/2021)

KENTUCKY BANKERS ASSOCIATION: “On behalf of the Kentucky Bankers Association and its 151 members throughout the Commonwealth, I am writing to express our opposition to a proposal that is under consideration as part of the reconciliation package.  This proposal requires all financial institutions to provide data reports for any transactions into or out of ‘financial accounts’ that exceed $600 (‘$600 IRS DATA SWEEP’). We urge your express opposition to this provision. … The $600 IRS DATA SWEEP creates fissures in the relationship between banks and their customers, which has always been given special privacy protections both by the courts, as well as by state and federal legislation.  Once data leaves the banks, the same level of protection is not guaranteed. … The amount of data collected through the $600 IRS DATA SWEEP will be massive, complex, expensive, and systems will take years to complete. It is unlikely that a single bank has a system in place right now that would collect all of the required data into a single report that would satisfy IRS requirements for download.” (Kentucky Bankers Association, Letter to Sen. McConnell, 9/14/2021)

‘This Is The Last Thing The Banks Need, To Lose The Full Faith And Credit Of Their Customers Because We Are Reporting Everything To The IRS’

MICHAEL BUSH, Chief Executive of Mississippi River Bank: “This is the last thing the banks need, to lose the full faith and credit of their customers because we are reporting everything to the IRS… Does the government really want to be saying to everyone we think you are tax cheats?” (“Yellen, IRS Push Democrats to Require Banks to Report Taxpayers’ Annual Account Flows,” The Wall Street Journal, 9/15/2021)