Treasury Secretary Janet Yellen defended the Biden administration’s proposal to force U.S. banks to report any Americans’ transactions of $600 or more to the Internal Revenue Service by claiming that the financial agency already tracks American activity anyway.
“Banks already report directly to the IRS the interest that they pay on accounts when it exceeds $10, and this is not a proposal to provide detailed transaction-level data by banks to the IRS,” Yellen argued. “It is a proposal to add two additional pieces of easily ascertained information onto the 1099-INT form the banks already file.”
The Biden official further justified her position by claiming that the government needs money and siphoning funds off of taxpayers is an effective way to fill that gap.
“I think it’s important to recognize that we have a tax gap that’s estimated at $7 trillion over the next decade,” Yellen said. “That is taxes that are due and are not being paid to the government that deprive us of the resources that we need to do critical investments to make America more productive and competitive.”
Yellen went on to claim that the IRS, which already possesses “a wealth of information about individuals,” should gather more information on “higher-income individuals who have opaque sources of income … not low-income people.”
While questioning Yellen, Sen. Cynthia Lummis noted that a “$600 threshold is not usually where you’re going to find the massive amount of tax revenue you think Americans are cheating you out of,” but the Treasury head claimed that “it’s important to have comprehensive information so that individuals can’t game the system and have multiple accounts.”
The Wyoming Republican further criticized Yellen’s endorsement of the regulatory plan as a “burden” to ordinary Americans who might try to “find alternatives to traditional banks just to thwart IRS access to their personal information, not because they’re trying to hide anything but because they’re not willing to share everything.”
“My question is: Are you aware of how unnecessary this regulatory burden is?” Lummis asked Yellen. “Do you distrust the American people so much that you need to know when they bought a couch? Or a cow?”
In addition to backing more regulations through the IRS, Yellen openly supports and promotes a new global tax rate. While Yellen brags backing from multiple countries for the new tax, she faces a battle on the homefront where Republican legislators note that a global tax could hurt the domestic economy.