ATR Supports Crapo Amendment to Prohibit IRS Financial Reporting Requirements
Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) has introduced S. Amdt #3099 to S.Con Res. 14, the Fiscal Year 2022 Budget Resolution. ATR urges Senators to support and vote YES on this amendment.
This amendment would prohibit the IRS from implementing President Biden’s proposal to create a new comprehensive financial account information reporting regime which would force the disclosure of any business or personal account that exceeds $600.
Not only would this include the bank, loan, and investment accounts of virtually every individual and business, but it would also include third-party providers like Venmo, CashApp, and PayPal.
President Biden wants to give the IRS $80 billion in new funding. This funding would add 87,000 new IRS agents that Biden claims will squeeze taxpayers for an additional $787 billion. It will allow the agency to audit and harass taxpayers. A major way the agency will do this is through the new $600 reporting regime.
The IRS has a record of mismanagement and corruption. It has routinely failed to protect taxpayer data. Rather than being given new responsibilities the IRS needs reform so that it can better assist taxpayers.
See Also:
Biden’s $600 Financial Reporting Requirement Could Lead to Even More Violations of Taxpayer Rights
Poll: 65% of Voters Say IRS Has Too Much Power
IRS Has Repeatedly Failed to Protect Taxpayer Data
IRS Fails to Document Contractor Laptops, Putting Private Taxpayer Data at Risk
Photo Credit: Senator Mike Crapo
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ATR, Partners Urge Biden Administration to Prioritize Free Trade Agreements
Americans for Tax Reform on Monday released a new coalition letter signed by 11 free-market organizations calling on the Biden administration to pursue free trade agreements with more countries.
The letter requested that President Biden prioritize free trade agreements with the United Kingdom and Taiwan, as well as pursue accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The letter highlights benefits of free trade agreements, such as the fact that “trade agreements increased GDP by $88 billion, increased trade by $1.3 trillion, and helped create 485,000 jobs.” It further explains that trade agreements which promote free-market rules ensure “American innovators, exporters, and workers are treated fairly abroad.”
For example, the Reagan administration pushed for a global minimum standard of intellectual property protection; ultimately the world agreed and signed the TRIPS agreement. Without such protections, the R&D and licensing agreements between innovators and manufacturers of life-saving COVID-19 vaccines may not have been possible.
Yet, the letter argues, more needs to be done to protect IP. Coerced transfers and other violations of American intellectual property rights continue to proliferate globally. Trade agreements are the proper venue to advance enforceable protections.
The letter underscores that free trade agreements are a highly bipartisan issue in the United States. It states, “The Uruguay Round negotiations and NAFTA negotiations both started under Republican Administrations but were completed by a Democratic Administration.”
The letter calls on the Biden administration to “engage boldly with our trading partners to extend the benefits of free trade: defend the free-flow of data, remove burdensome tariff and non-tariff barriers, secure the next-generation IP protections, and address how state-owned enterprises and trade-distorting subsidies adversely affect open-market economies.”
Finally, the letter concludes, “Trade agreements are mutually beneficial exchanges that create win-win transactions for all countries involved. There are no losers, only winners. Trade helps strengthen the free world.”
Click here to read the full letter.
Photo Credit: Rafael de Campos from Pexels
Democrats’ $3.5 Trillion Blowout Will Increase the Death Tax for Many Families
As part of the $3.5 trillion reconciliation package, Democrats have included several provisions that would increase the Death Tax. The Death Tax is fundamentally unfair, hurts job creation and economic growth, and is devastating to family-owned businesses and farms across the country. This tax should not be expanded – it should be repealed.
Specifically, the package includes three problematic changes to the death tax resulting in a $77 billion tax increase:
1. Changing the death tax valuation rules.
Families hit with the Death Tax are allowed two discounts when determining the value of their estate: a lack of control discount and a lack of marketability discount. A lack of control discount can be claimed when a family holds a minority ownership stake in an asset, resulting in the asset holding less value on the open market. A lack of marketability discount applies when an asset held by the family cannot easily be liquidated because of market barriers. Without these discounts, families will be forced to pay taxes on an over-valued asset.
While this change applies to passive income, many families hold this income as part of their estate plan. Therefore, many family businesses and farms will pay a higher tax under this rule change.
2. Repealing the TCJA Death Tax reduction.
The Tax Cuts and Jobs Act doubled the Death Tax exemption to $11.18 million for single filers and $22.36 million for married filers. For family businesses, repealing this reduction would be a major tax hike: by the end of the year, the amount of money they can protect from the estate and gift taxes would be cut in half.
Nearly 70 percent of small business owners consider the TCJA exemption parameters important.
3. Changing the Grantor Trust rules.
As Family Enterprise USA explains, this provision would pull “grantor trusts into a decedent’s taxable estate when the decedent is the deemed owner of the trusts. Prior to this provision, taxpayers were able to use grantor trusts to push assets out of their estate while controlling the trust closely.” This provision would also tax a sale from a grantor trust to its owner.
Because so many family farms and businesses use Grantor Retained Annuity Trusts (GRATS) and other estate planning tools, this change would upend many of these taxpayers’ estate plans, forcing family businesses, farms, and ranches to hire expensive lawyers and accountants to rework their plans.
The death tax is already a fundamentally unfair and bad tax policy. It is levied on assets that have been taxed previously through income taxes, capital gains taxes, and the corporate income tax. It disproportionately impacts family-owned businesses like farmers and ranchers especially that tend to be asset rich but cash poor. On the other hand, the wealthy often evade the tax. While the mega-wealthy and family farms technically face the same death tax, small business owners cannot afford to hire a small army of lawyers and accountants to exempt large portions of their estates from the tax. Many countries recognize that a high Death Tax is bad tax policy. Currently, the United States has the 4th highest estate and inheritance tax among developed countries, just behind France.
The tax also hurts jobs and economic growth. Family-owned businesses across the country employ 59 percent of the workforce. Family-owned businesses also generate 54 percent of the U.S. GDP. Importantly, a 2017 study by the Tax Foundation found that the US could create over 150,000 jobs by rolling back the estate tax. Similarly, a 2012 study by the Joint Economic Committee found that the death tax has destroyed over $1.1 trillion of capital in the US economy, which results in fewer jobs and lower wages.
Finally, the death tax is radically unpopular. A report by NPR found that 76 percent of Americans support full, permanent repeal of the Death Tax. A similar 78 percent, and 67 percent of Democrats, believe “death itself should not be a taxable event. Families should not have to pay taxes just because a family member with some wealth died.” Further, 80 percent of voters, and 73 percent of Democrats, believe “death should not result in the highest tax rates of the entire US tax code…taking more than 40% of someone’s wealth just because they died isn’t fair.”
By expanding this tax, Democrats will impose new, damaging costs on families, family-owned businesses, farms, ranches, and more.
Photo Credit: "Family Farm Day" by Lauren G. is licensed under CC BY-ND 2.0.
More from Americans for Tax Reform
Norquist Warns of Dem Drug Price Controls, New IRS Reporting Regime
In an interview on Fox Business Network’s ‘Fox Business Tonight,’ ATR President Grover Norquist highlighted several troubling aspects of Democrats' $3.5 trillion reconciliation package. Specifically, he warned of Democrats’ plans to impose drug price controls based on international prices, creating a 95 percent excise tax on manufacturers that do not sell drugs at the government-set price. Additionally, he warned of Democrats' plan to give the IRS access to the inflows and outflows of virtually every American’s financial accounts.
Norquist also references back to 1966 and other moments in history, when Democrats’ tax-and-spend sprees resulted in major political losses.
Click here to watch the entire interview.
Norquist explains how the proposal to impose a 95 percent excise tax and international reference pricing scheme on American drug manufacturers will ship medical innovation and discovery overseas:
“Sinema, the Senator from Arizona, has said that we just can’t do this massive power grab that the Democrats want on pharmaceuticals. This basically would end American leadership on drugs because we’d tax it so heavily that people who’d want to come up with new drugs for cancer would do it in Switzerland, not in the United States.”
Norquist on the creation of a new financial account reporting regime which would force the disclosure of any business or personal account that exceeds $600, including bank accounts, loan accounts, investment accounts, and third-party payment providers like Venmo and CashApp:
“You will lose your financial privacy, your personal privacy. They want to know what your Venmo is doing, what your PayPal is doing, what your CashApp is doing. They used to say, “We want to know if you’re moving $10,000 or more in cash around.” Then, it turns out they’re really abusing that, even though it sounds sort of reasonable – how many people move around $10,000 in cash? Well, a lot of small businesses do at the end of a week. [The IRS] would just go through people’s lives; they would hold onto their money even if nothing had gone wrong… They’re now talking about, not $10,000, but $600… If you have $600 in your account, they want to know everything there is to know about that account. And they don’t keep secrets very well at the IRS.”
Norquist on the failure of the Great Society and its political ramifications, and how this signals major losses for Democrats across the country if they move forward with their $3.5 trillion blowout:
“They’re looking at 1966, after the Great New Deal was passed – all these ‘wonderful spending programs’ with all the same promises that we’re told now: the government is going to do everything for you. We spent $27 trillion and I’m not sure you can show very much that we accomplished because of the Great Society. But one thing that happened is the Democrats lost dozens and dozens of House members… When the Democrats have overreached on taxes and spending, in 1966 they got slapped heavily, and then Nixon got elected in 1968, same thing happened in 1994, and same thing happened in 2010. There are a lot of Democrats out there who realize they’re being pushed into traffic.”
More from Americans for Tax Reform
ANALYSIS: ABC Test Breaks Biden's $400,000 Tax Pledge
Democrats are attempting to backdoor parts of the PRO Act in their $3.5 trillion reconciliation spending blowout.
As part of this effort, Democrats are attempting to include Sen. Ron Wyden's "Unemployment Insurance Modernization Act," in the reconciliation package. This legislation contains a California-style "ABC" test that would lead to the forced reclassification of independent contractors to employees, affecting the 59 million Americans that engage in some form of freelance work.
According to ATR analysis, this is a violation of President Joe Biden's pledge to not raise taxes on any American making less than $400k.
Click here to view our full memo.
Photo Credit: Gage Skidmore
Under Dem Bill, Key States to Face Higher Taxes than China
The corporate tax rate increase and the capital gains tax rate increases in the Democrat reconciliation bill will leave states represented by swing-vote Democrats with significantly higher taxes than China.
China's corporate tax rate is 25% and its capital gains tax is 20%.
In Sen. Kyrsten Sinema's Arizona, the combined federal-state corporate tax rate would be 30.1% vs. China's 25%. The combined federal-state capital gains tax would be 35.17% vs. China's 20%
In Sen. Maggie Hassan's New Hampshire, the combined federal-state corporate tax rate would be 32.2% vs. China's 25%. The combined federal-state capital gains tax would be 36.8% vs. China's 20%.
In Sen. Jon Tester's Montana, the combined federal-state corporate tax rate would be 31.5% vs. China's 25%. The combined federal-state capital gains tax would be 38.41% vs. China's 20%.
In Sen. Joe Manchin's West Virginia, the combined federal-state corporate tax rate would be 31.3% vs. China's 25%. The combined federal-state capital gains tax would be 38.3% vs. China's 20%.
Congressional Democrats are on the verge of raising the federal corporate tax rate from 21% to 26.5%. This would result in a combined federal and state rate average of 31%, higher than China and higher than America’s major economic competitors. The developed world average (OECD) is 23.5%.
If the Democrats' reconciliation bill becomes law, the combined federal-state corporate tax rate and combined federal-state capital gains tax rates for all 50 states would be as follows:
(Source: Tax Foundation maps here and here)
ALABAMA
Corporate: 30%
Capital gains 35.21%
ARIZONA
Corporate: 30.1%
Capital gains: 35.17%
ARKANSAS
Corporate: 31.1%
Capital gains: 34.75%
CALIFORNIA
Corporate: 33%
Capital gains: 45.10%
COLORADO
Corporate: 29.8%
Capital gains: 36.35%
CONNECTICUT
Corporate: 32%
Capital gains: 38.79%
DELAWARE
Corporate: 32.9%
Capital gains: 38.40%
FLORIDA
Corporate: 29.8%
Capital gains: 31.80%
GEORGIA
Corporate: 30.7%
Capital gains: 37.55%
HAWAII
Corporate: 31.2%
Capital gains: 39.05%
IDAHO
Corporate: 31.6%
Capital gains: 38.30%
ILLINOIS
Corporate: 33.5%
Capital gains: 36.75%
INDIANA
Corporate: 30.1%
Capital gains: 35.03%
IOWA
Corporate: 33.7%
Capital gains: 37.62%
KANSAS
Corporate: 31.6%
Capital gains: 37.50%
KENTUCKY
Corporate: 30.2%
Capital gains: 36.80%
LOUISIANA
Corporate: 30.8%
Capital gains: 35.89%
MAINE
Corporate: 33.1%
Capital gains: 38.95%
MARYLAND
Corporate: 32.6%
Capital gains: 37.55%
MASSACHUSETTS
Corporate: 32.4%
Capital gains: 36.80%
MICHIGAN
Corporate: 30.9%
Capital gains: 36.05%
MINNESOTA
Corporate: 33.7%
Capital gains: 41.65%
MISSISSIPPI
Corporate: 30.2%
Capital gains: 36.80%
MISSOURI
Corporate: 28.7%
Capital gains: 37.20%
MONTANA
Corporate: 31.5%
Capital gains: 38.41%
NEBRASKA
Corporate: 32%
Capital gains: 38.64%
NEVADA
Corporate: 26.5%
Capital gains: 31.80%
NEW HAMPSHIRE
Corporate: 32.2%
Capital gains: 36.80%
NEW JERSEY
Corporate: 35%
Capital gains: 42.55%
NEW MEXICO
Corporate: 30.8%
Capital gains: 35.34%
NEW YORK
Corporate: 31.8%
Capital gains: 42.70%
NORTH CAROLINA
Corporate: 28.3%
Capital gains: 37.05%
NORTH DAKOTA
Corporate: 29.7%
Capital gains: 33.54%
OHIO
Corporate: 26.5%
Capital gains: 35.79%
OKLAHOMA
Corporate: 30.9%
Capital gains: 36.55%
OREGON
Corporate: 32.1%
Capital gains: 41.70%
PENNSYLVANIA
Corporate: 33.8%
Capital gains: 34.87%
RHODE ISLAND
Corporate: 31.6%
Capital gains: 37.79%
SOUTH CAROLINA
Corporate: 30.2%
Capital gains: 35.72%
SOUTH DAKOTA
Corporate: 26.5%
Capital gains: 31.80%
TENNESSEE
Corporate: 31.3%
Capital gains: 31.80%
TEXAS
Corporate: 26.5%
Capital gains: 31.80%
UTAH
Corporate: 30.1%
Capital gains: 36.75%
VERMONT
Corporate: 32.7%
Capital gains: 40.55%
VIRGINIA
Corporate: 30.9%
Capital gains: 37.55%
WASHINGTON STATE
Corporate: 26.5%
Capital gains: 38.80%
WEST VIRGINIA
Corporate: 31.3%
Capital gains: 38.30%
WISCONSIN
Corporate: 32.3%
Capital gains: 37.16%
WYOMING
Corporate: 26.5%
Capital gains: 31.80%
WASHINGTON, D.C.
Corporate: 32.6%
Capital gains: 42.55%
Please visit Tax Foundation site for handy maps:
House Democrats Corporate Income Tax Rates by State | Tax Foundation
House Democrats Capital Gains Tax Rates in Each State | Tax Foundation
New York State Is Hunting Down Fleeing Taxpayers
They can’t be bargained with, they can’t be reasoned with, they don’t feel pity or remorse or fear, and they will not stop ever until they have your tax dollars… No, we’re not talking about the Terminator, but the New York Tax and Finance Department.
This year up to 149,000 former New York residents have received notices from the New York Tax and Finance Department asking them to provide proof of residence and personal income allocation, to see if they owe the state more than they paid. “The state is being very aggressive in going after people who are claiming to have moved out of New York,” said Alan Goldenberg, a state and local tax principal at Anchin, Block & Anchin LLP.”
This course of action isn’t just unusual for the sheer volume of letters, it is also unusual for the income bracket being targeted. “Normally, it would take $1 million a year in income to trigger heightened scrutiny, but many people who are earning far less are receiving letters.” Many of those receiving letters make only $100,000-$300,000 a year, much less than the usual recipient of these letters.
The reason for this is that many people left New York during the pandemic lockdowns, trying to take their tax dollars with them. To recoup these losses, New York needs to force these people to continue paying taxes, hence the deluge of audits.
Now, you may be wondering, how can this be legal? Doesn’t moving to another state mean you no longer owe taxes to your old one? The answer lies in the “convenience rule” for telecommuting, in which “New York state taxes the money that nonresident workers draw from in-state sources, including the income that commuters make when they choose to work from home.”
The only ways for workers in the other states to avoid this rule is to either to prove they worked remotely out of necessity (which seems feasible during the COVID-19 pandemic), rather than convenience, or prove that their employer established an office in that state.” Recently New Hampshire sued Massachusetts over that state’s collection of tax dollars from remote workers who were no longer commuting into the Boston area, but the Supreme Court rejected it, while “federal courts have ruled that states can tax nonresidents’ income when employees have a substantial link to the state doing the taxing.”
As if that wasn’t bad enough, to even prove they are nonresidents, former New Yorkers must prove five things: "The amount of time spent, the size and value of their homes, the location of valuable items like heirlooms or wedding photographs, the location of an active business, and lastly, where your family lives.” In the meantime, “The burden of proving where you were falls on you,” Chernick said. “If you can’t prove a date where you were, then the state is going to allocate that data to New York.” If they can’t prove these things, they will be taxed as if they were still living in New York.
The state’s tax agents are some of the most aggressive in the nation. They will check refrigerator contents, which doctors you go to, and where your pets are located.
New York was overtaxed and overregulated before the pandemic, but the lockdowns turned conditions from annoying to unbearable for many people. They can leave, but they can’t check out without a fight.
Photo Credit: "Queensboro Bridge New York October 2016 003.jpg" by King of Hearts is licensed under CC BY-SA 4.0
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Candidate Glenn Youngkin Unveils Billions in Proposed Tax Cuts
Virginia gubernatorial candidate Glenn Youngkin proposed $1.8 billion in one-time and recurring tax cuts, outlining an ambitious “Day 1” game plan to reshape the Old Dominion’s economic and political future.
Below is a list of Youngkin’s proposals to ease the tax burden on Virginia families:
- One-time tax rebates of $600 for joint filers and $300 for individual filers.
- Double the standard income tax deduction, up to $18,000 for joint filers and $9,000 for individual filers. This would save married couples $518 every year.
- Suspend the recent increase in the Virginia gas tax for 1 year.
- Eliminate the 2.5% sales tax on food and personal hygiene products.
- Require citizen approval for any local property tax increase.
- Exempt the first $40,000 in veteran retirement pay.
- Institute a tax holiday for small businesses.
If successfully passed and implemented, Youngkin’s tax plan would save a typical family of four almost $1,500 in its first year – a massive financial windfall for the middle class. In a state with the 9th-highest income tax in the nation, a doubling of the standard income tax deduction means hundreds in tax savings, including for low earners who often sacrifice a greater share of their income to the government. “Virginia ran a $2.6 billion surplus last year in the middle of a pandemic because the liberal leadership in Richmond overtaxed everybody,” Youngkin said at a forum. “That’s Virginia’s money, not Terry McAuliffe’s.”
The Republican candidate’s proposals are a refreshing alternative to the tax-and-spend policies of his opponent, former governor Terry McAuliffe. While serving as Virginia’s governor from 2014 to 2018, McAuliffe advocated for tens of millions in new taxes for Northern Virginia, including a 2–3% levy on hotels and a 66% increase in the real estate tax. McAuliffe also supported a hike in the wholesale gas tax, which would have added several cents to the cost of a gallon of fuel in the region. Though he told the Washington Post he would not raise taxes if elected again, McAuliffe does not share Youngkin’s bold aspirations to pass billions in needed tax relief.
Youngkin and McAuliffe teed off in their first gubernatorial debate last week, revealing deep divides in how they would each wield power in Richmond. While Youngkin said he would rely on public service announcements to encourage Virginians to get vaccinated, calling it a matter of personal choice, McAuliffe doubled down on a promise to mandate vaccinations for “everybody” in the commonwealth. Youngkin also said his tax plan would bring down the cost of living for Virginia residents and make the state a better place to do business, as he hammered his opponent for high spending proposals.
“If Terry McAuliffe is your governor, then get your checkbook out, because he’s going to have to raise taxes for you,” Youngkin said at Thursday’s debate.
Nearly all of Youngkin’s tax plans require the approval of both chambers of the Virginia legislature. While both houses are currently controlled by the Democratic party, all 100 seats in the House of Delegates are up for election this year. If Republicans can flip six seats to regain control of the House in November, a Youngkin tax cut would need only two Democratic votes in the narrowly split Senate to become reality.
Photo Credit: Glenn Youngkin
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Lou Barletta Signs the Taxpayer Protection Pledge
Former Congressman Lou Barletta has signed the Taxpayer Protection Pledge in his bid for the Republican nomination for Governor of Pennsylvania. The Pledge, sponsored by Americans for Tax Reform, commits signers to oppose any and all efforts to increase taxes.
Americans for Tax Reform offers the Pledge to all candidates for state and federal office. Thirteen governors and over 1,000 state legislators have signed the Pledge. Lou Barletta will join more than 30 of Pennsylvania’s state representatives in signing the Pledge this year.
Attorney General Josh Shapiro and other Democratic contenders for governor do not share Mr. Barletta’s commitment to a pro-growth tax regime. Since taking power in 2014, the incumbent Wolf administration has proposed or supported 14 different tax hikes on Pennsylvania families. The governor’s first proposal – a $4.6 billion tax increase – would have been the largest in state history, burdening a family of four with an additional $1,400 in annual taxes. This February, Democrats proposed another $6 billion in new taxes, including raising the state’s flat personal income tax by a prodigious 46%.
By signing the Taxpayer Protection Pledge, Lou Barletta promises to take Pennsylvania in a new direction and prioritize the well-being of working families over unnecessary state spending.
Before the state Convention, ATR will publish a more detailed evaluation of each Republican candidate’s record and positions on taxes and government spending.
“I want to congratulate Lou Barletta for taking the Taxpayer Protection Pledge. Pennsylvanians deserve better than tax-and-spend policies that fall hard on the backs of hardworking families and small businesses. They want real solutions that create jobs, cut government spending, and make Pennsylvania a more attractive place to live and raise a family,” said Grover Norquist, president of ATR.
“By signing the Pledge, Lou Barletta has demonstrated that he understands the problems of hard-working taxpayers in Pennsylvania.”
“Democratic candidates in Pennsylvania have made it clear they will continue to pursue a higher tax and spend agenda that grows government and increases the burden of state spending on taxpayers. This is nothing new for supporters of the Wolf administration, which pursued tens of billions in new taxes over two terms in office,” Norquist continued.
The taxpayer protection Pledge is a public, written, commitment by an elected official or candidate to the voters of his or her state. The pledge is a commitment to oppose and vote against any tax increase. All candidates for federal and state office are offered the pledge each election cycle since 1986.
Photo Credit: US House of Representatives
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Biden Wants IRS to Snoop on Your Bank Account: "Amounts that come into their bank accounts, and what amounts go out of their bank accounts."
President Biden wants to impose the largest tax increase since 1968 and hire 87,000 new IRS agents and auditors. He wants them to have automatic access to information about every Americans' bank account as well as every Paypal, Venmo, and CashApp account, even if you are not accused of wrongdoing.
The IRS would automatically obtain and store the data.
On Thursday Biden tried to justify the privacy invasion by saying it was just "two pieces of information."
What are the two pieces?
Biden said:
"The amounts that come into their bank accounts, and what amounts go out of their bank accounts."
Are you comforted?
If Democrats enact the plan, banks and third-party payment providers, like Venmo, PayPal, and CashApp would be required to report ALL account holders’ aggregate account outflows and inflows to the IRS.
The IRS will use these powers against Americans of all income levels. Requiring banks and third-party payment providers to report this kind of information is an indefensible invasion of privacy.
The mass collection of this bank account data will lead to many IRS fishing expeditions into the matters of innocent Americans. There are grave criminal justice ramifications to this proposal.
At a time when Americans are already struggling, these new reporting rules would create unnecessary burdens. As noted in this excerpt from Forbes:
It may create problems, however, that should be considered and addressed as this plan works its way through Congress. For example, consider a young couple saving up to buy a home. All savings are put into the “dream home” savings account. Then, when it comes time to make the down payment, the $50,000 dream home savings goes into the regular checking account, which is then wired to the seller’s escrow account. Buying a home is not a taxable event (at least for federal income tax), selling one is. Will the IRS receive information from the financial institutions that leads to an audit?
Paul Merski, vice president of congressional relations at Independent Community Bankers of America, voiced his criticism of the proposal:
Banks already report millions of transactions a day to the Financial Crimes Enforcement Network in the form of currency transaction reports, in addition to suspicious activity reports, which are required when potential illicit activity is detected by a bank. Banks are required to submit currency transaction reports when a deposit or withdrawal is $10,000 or more, a threshold that’s already very low, Merski said.
Merski said the proposal, as written, is akin to “sending your bank statement to the IRS every month,” which would be opposed by the banking industry because of the reporting burdens already required by federal regulators.
“The federal government can’t track all of that—any more requirements would be adding more hay to that haystack,” he said.
As also noted by the Wall Street Journal, the bank account snooping will give the IRS an "enormous" quantity of new data:
It would also create an enormous flow of information that the IRS would have to learn how to manage and use.
--
Congress will have to weigh the potential burdens and privacy concerns against the revenue gains as it considers the plan.
The IRS has a long and poor and track record when it comes to safeguarding taxpayer information, so it won't be long before the private bank account information is shared with outside parties such as news organizations and progressive groups.
Photo Credit: Center for American Progress Action Fund
Ways and Means Dems Reject Commonsense Amendments to $3.5 Trillion Blowout
Democrats on the House Ways and Means Committee voted against numerous commonsense amendments introduced by Republican members throughout the four-day long markup of the $3.5 trillion tax and spend reconciliation plan.
If this legislation is signed into law, it will raise taxes on working families and small businesses. It will make America less globally competitive, increase the cost of goods and services, and eliminate jobs including high-paying manufacturing jobs.
Below are ten commonsense amendments that Democrats rejected.
1. Democrats voted against ensuring the corporate rate is competitive with China and the rest of the world. Specifically, they rejected Rep. Kevin Brady’s (R-Texas) “Build Back Better in America, not China” amendment which would have prevented several tax hikes that will put America at a competitive disadvantage with foreign competitors. Under the Democrats’ plan, the U.S. federal and state corporate tax rate would be 31 percent, significantly higher than China’s corporate tax rate is 25 percent and the OECD average rate in 23.5 percent.
2. Democrats voted in support of a tax break for well-funded, elite universities. Democrats voted against Rep. Tom Reed’s (R-N.Y.) “No Tax Shelters for Ivy League Elites” which would have prevented $2.5 billion loophole for wealthy Ivy League universities. This provision effectively rewards the institutions with the largest endowments.
3. Democrats opposed an amendment preventing a high global minimum tax on U.S. businesses before ensuring China enacts a minimum tax of its own. Rep. Devin Nunes’s (R-Calif.) "Stop Shipping Jobs to China" amendment would have prevented increasing taxes on the global intangible low-taxed income (GILTI) regime until China enacts a global minimum tax of its own. It also would have prevented the GILTI rate from being a rate higher than China’s.
4. Democrats voted against protecting Americans from being harassed and targeted by the IRS. Rep. Mike Kelly’s (R-Pa.) "Protecting Families and Small Businesses from a Supercharged IRS" amendment would have prevented the IRS from creating a new reporting regime that forces the disclosure of any business or personal account that exceeds $600. Not only would this include the bank, loan, and investment accounts of virtually every individual and business, but it would also include third-party providers like Venmo, CashApp, and PayPal.
5. Democrats voted in favor of reinstating tax shelters for blue-state millionaires instead of funding cancer research. Rep. Adrian Smith’s (R-Neb.) "Cancer Cures Instead of SALT Tax Shelters for Millionaires" amendment would have funded cancer research and extend middle-class tax cuts instead of reinstating the full SALT tax deduction for wealthy people in blue states, a $400 billion tax break that many Democrats want to include in the reconciliation bill.
6. Democrats voted in favor of a $96 billion tobacco & vaping tax hike that will hit low- and middle-income Americans. Rep. Drew Ferguson’s (R-Ga.) “Preserving Personal Choices” amendment would have prevented this $96 billion tax hike. Increasing tobacco taxes is a clear violation of President Biden’s pledge to not raise taxes on anyone making less than $400,000 a year.
7. Democrats refused to ensure that their tax increases wouldn't reduce U.S. employment and investment. Rep. Mike Kelly’s (R-Penn) “Return to Full Employment in America” amendment would have required the Treasury Secretary certify that Democrats’ tax increases won’t reduce U.S. employment and investment. Many of the tax hikes being pushed by Democrats will harm the economy. For instance, 70 percent of the corporate income tax is borne by workers through lower wages and less jobs, while increasing the capital gains rate will reduce investment and slow growth.
8. Democrats voted against ensuring their drug price controls wouldn't shift pharmaceutical investment and jobs to China. Rep. Darin LaHood’s (R-Ill.) "Standing Up to China" amendment would require H.R. 3, legislation to impose a 95% tax on medicines and foreign reference pricing wouldn’t shift medical innovation and manufacturing jobs to China. Nationwide, the pharmaceutical industry directly or indirectly accounts for over four million jobs across the U.S and in every state, according to research by TEconomy Partners, LLC. The average annual wage of a pharmaceutical worker in 2017 was $126,587, which is more than double the average private sector wage of $60,000.
9. Democrats refused to certify that new regulations and tax hikes on the energy sector wouldn't lead to increased oil and gas production by foreign competitors. Rep. Jodey Arrington’s (R-Texas) “No Giveaways to Polluting Countries” amendment would have required that the Treasury Secretary certify that Democrats' hikes on oil and gas would not reduce U.S. energy independence and increase oil and gas production in Russia, China, Venezuela, or Iran. The oil and gas industry supports 11.3 million total American jobs across all 50 states and accounts for nearly 8 percent of GDP. In 2017, jobs in the oil and gas sector paid an average salary of $102,000, 85 percent higher than the average private sector salary.
10. Democrats voted against keeping intellectual property and jobs in the United States. Rep. Kevin Hern’s (R-OK) “Offshore Tax Haven Reduction” amendment would have struck down the repeal of the deduction for foreign-derived intangible income (FDII). If this tax increase goes into effect, it will ship American intellectual property and jobs overseas, creating long-term economic damage to the country. It will undermine American competitiveness and benefit foreign countries like China that provide extensive and generous tax credits and subsidies to incentivize IP.
Photo Credit: "US Capitol Dome on an Overcast Evening" by John Brighenti licensed under CC BY 2.0
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