Fierce public backlash could force Democrats to rethink a proposal that includes the monitoring of most financial accounts, the Washington Examiner reported.
A plan to provide the IRS with access to individual bank accounts with balances as low as $600 may end up significantly modified or dropped altogether, the Examiner reported Thursday.
Republicans and trade groups oppose the proposal saying it would infringe on privacy, create significant liability for financial institutions, and add new costs for consumers.
Speaker Nancy Pelosi, D-Calif., brushed off concerns about the provision when reporters asked about it on Tuesday, the Examiner said.
“Yes, there are concerns that some people have,” Pelosi said. “But if people are breaking the law and not paying their taxes, one way to track them is through the banking measure.”
Pelosi did add, however, that the $600 threshold was “a negotiation that will go on, as to what the amount is.”
News that progressives want to monitor peoples’ bank accounts could hurt the Democrats’ attempt to pass a massive social spending bill that would create new government programs paid for with tax increases.
President Joe Biden and fellow progressives have said tax increases will be aimed at corporations and wealthy individuals. Biden has promised families with incomes less than $400,000 would not be included.
The Democrats’ IRS provision, though, would require financial institutions “to track and submit to the IRS information on the inflows and outflows of every account above … $600 during the year, including breakdowns for cash,” the American Bankers Association said.
The ABA and 40 business groups, in a letter sent earlier this month to House leaders, urged lawmakers to drop the proposal, according to the Examiner.
“While the stated goal of this vast data collection is to uncover tax dodging by the wealthy, this proposal is not remotely targeted to that purpose or that population,” business groups, including the Consumer Bankers Association and the National Association of Realtors, wrote. “This proposal would almost certainly undermine efforts to reach vulnerable populations and unbanked households.”
Progressives have been reluctant to kill the provision because they intend for the increased IRS enforcement to pay for more than 20% of their social spending package.
The Examiner said House Ways and Means Committee Chairman Richard Neal, D-Mass., was considering a plan to increase the IRS-access threshold to a balance minimum of $10,000.
While the average household bank account balance in 2019 was about $40,000, according to a Federal Reserve Board survey, the new threshold still could affect individuals who do not consider themselves wealthy.