Democrats pare back proposed IRS bank reporting requirements - POLITICO

Plan would raise reporting threshold to $10,000 amid criticism from some Democrats that the plan would sweep in too many people.

Senate Finance Chair Ron Wyden (D-Ore.) will hold a news conference on the proposal this afternoon.

The new plan sets the threshold at $10,000, after discussions between congressional Democrats and the Biden administration, and would exempt certain income from wages or federal programs like Social Security.

Banks still opposed: The banking industry, which is fighting the reporting requirement, wasn't moved by the Democrats' revised proposal.

Senate Finance Chair Ron Wyden (D-Ore.), who is holding a news conference on the proposal this afternoon, will note that the proposal will also include an exemption for large purchases — like a down payment for a house.

Tax dodging argument: Treasury officials and other key Democrats have argued that the plan confronts a key inequity in the tax system — that it’s far easier for higher-earning people to dodge taxes, particularly by low-balling or not reporting private business income, than it is for workers who have their wages reported on a W-2 form

Conservatives believe Democrats could be forced to cut the proposed reporting requirement — much like they had to scrap a proposal to tax unrealized capital gains at death when it grew too controversial, and particularly if the Democrats keep having to shrink the potential size of their tax-and-spend package