Following heated backlash from Republicans and banks across the country, Democrats are raising the threshold of a controversial proposal that would require banks to report data on accounts — and are allowing certain exemptions.
Previously, the proposal set the threshold at $600, which Republicans, and several states, loudly criticized as an invasion of privacy.
On Tuesday, the Treasury Department announced Democrats are setting the new threshold at $10,000 and exempting certain income from W2 wages or federal programs like Social Security.
Democrats hope to include the proposal in a sweeping social spending bill, which the party has been negotiating over for weeks. While moderates and progressives have gone back and forth over the bill’s price tag, some lawmakers hoped to see the final framework of the legislation as early as this week.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) is set to hold a press conference on the updated proposal Wednesday, according to Politico, where he will outline that the proposal will also exempt large purchases, such as a down payment on a house. He will also reportedly make clear that “The IRS would not know what any taxpayer is purchasing.”
On Tuesday, Wyden revealed the threshold of $10,000 was chosen as that number is often used in other bank reporting requirements such as banks reporting aggregate cash transactions of $10,000 or more.
The purpose of the proposal is to catch and identify wealthy taxpayers who are not relying on W2 income and could be hiding and not reporting other sources of income.
Wyden claimed the proposal could raise “hundreds of billions of dollars” by catching such tax evaders.
The Biden administration has tried to emphasize that the proposal would not identify individual transactions and would only focus on gross annual inflows and outflows of the accounts.
Treasury Secretary Janet Yellen endorsed the new proposal on Tuesday, once again highlighting how it will make it harder for wealthy American taxpayers to hide other sources of taxable income.
“Today’s new proposal reflects the Administration’s strong belief that we should zero in on those at the top of the income scale who don’t pay the taxes they owe, while protecting American workers by setting the bank account threshold at $10,000 and providing an exemption for wage earners like teachers and firefighters,” she said in a statement.
Despite the massive jump in the threshold, some Republicans think there must be a higher number for the GOP to get on board.
“It would have to be one that was so high that small businesses weren’t pulled into the net,” Sen. Mike Crapo (R-Idaho) told reporters.
“And I don’t know how to say what that is, but it’s gonna be millions. I’m not going to tell you what the threshold is where I would be comfortable with it, but there’s a lot of people being brought into this unnecessarily.”