How the banking industry is using social media to kill Biden’s efforts to tax the rich
A key provision of President Joe Biden’s Build Back Better plan is causing confusion amid a sustained lobbying campaign from banks large and small, and a big signal from right-wing media figures.
A flurry of headlines about a proposed Internal Revenue Service reporting requirement for banks, which would require financial institutions to report annual net inflows and outflows on accounts with more than $ 600 – or the same amount in transactions – seems to be based on the false premise that the Biden administration is to “spy” or “monitor” the finances of individuals, or otherwise follow all transactions that a person performs.
“Fury as Biden Tries to Leave IRS SNOOP in Your Bank Accounts,” read a headline in the Daily Mail.
A number of viral social media posts, many from prominent conservative experts, also appear to contain this misconception.
“The Biden administration is trying to allow the IRS to monitor every withdrawal, deposit and transaction you make from your personal bank accounts,” right-wing commentator Candace Owens wrote on Twitter this week.
“If you have $ 600 or more, the bank will have to report ALL of your banking information to the IRS! #Gouvernement #bidenadministration #communistusa” a post on TikTok bed.
Another Facebook post widely shared by a community bank in Oklahoma and reported by Snopes this week even called the provision an “unprecedented invasion of privacy.” The fact-checking service assessed the claim as “mixed”.
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While it is true that the proposal would strengthen the already existing reporting requirements for banks, current policy would only require banks to report total annual entries and exits on a given account, not individual transactions – information according to the administration would allow the IRS to better target its audits on high incomes. The White House estimates the provision would generate nearly $ 460 billion over the next decade, an amount that officials say would help fund an expansion of key social programs, according to the Wall Street Journal.
Supporters of the provision also point out that much of the information that banks would be required to report is already collected elsewhere.
“Only total entries and exits from the previous year would be declared on the annual forms”, Center for American Progress researchers Seth Hanlon and Galen Hendricks write. “No one would say the IRS is watching you in your work because it receives a W-2 from your employer with your total pay every January.”
But the industry appears to be largely winning the PR campaign.
Amid a sustained pullback, House Democrats this week removed the measure from their wishlist for tax policy changes – not a fatal blow, but a sign that the new reporting requirement is unlikely to survive to the next round of talks between congressional leaders and White House officials. Democrats acknowledged this in comments to reporters on Wednesday.
“Members have expressed a lot of concern about the impact on low-income people who are suddenly subjected to this, and we understand that,” Rep. Dan Kildee, D-Mich., Told the Journal. “I don’t think the problem is completely resolved, but we weren’t ready to move forward.”
Treasury Department officials, including Secretary Janet Yellen, however, are not prepared to abandon this provision just yet. Yellen and IRS Commissioner Charles Rettig sent a series of letters to lawmakers on Wednesday in an attempt to urge them to comply with the new reporting requirement – and correct misconceptions that the IRS is using them to spy individuals or target ordinary Americans with audits.
They also added that research shows that tax compliance increases when individuals are aware that the government has independent information about their finances – using the W-2s in the workplace as an example.
“A broad-based reporting regime will better help the IRS target enforcement priorities on high-end people who accumulate income in an opaque fashion,” Ms. Yellen wrote in one of the letters. “Any suggestion that this whistleblowing regime will instead be used to target enforcement efforts at ordinary Americans is completely wrong.”