Republicans reiterated concerns about increasing financial institution reporting requirements and the implications that could have on taxpayers’ privacy.
“So where I do certainly believe that everybody should pay what they legally owe, I’m extremely concerned about the privacy aspects here that the administration is looking to expand the IRS, and their reach into people’s personal information … and to information reporting on the specifics of their bank accounts,” Rice said.
Mazur said the administration’s proposal to have banks report annual gross inflows and outflows of accounts is “very similar to the information reporting you already get from your bank about interest income.”
Rep. Donald S. Beyer Jr., D-Va., said while privacy is “incredibly important,” that shouldn’t be used as a “red herring” to keep Congress from collecting information that could help improve IRS audits of wealthy individuals who use complex tax structures to try to shield income from taxation.
“Where’s the balance between the unintended illegal leak of data on a handful of very rich people … and the importance of keeping people from cheating?” he said, without offering evidence the leak was unintended. “Is our priority to protect these traitors to our country who refuse to pay their fair share of the price of freedom, who cheat all those honest taxpayers who are out there?”
Some of the billionaires ProPublica reported on this week include Democratic megadonors such as hedge fund titan George Soros and Michael Bloomberg, former presidential candidate and founder of financial data and news provider Bloomberg LP. Others include investor Carl Icahn, a onetime adviser to former President Donald Trump, and media mogul Rupert Murdoch, head of News Corp. and founder of the Fox television network.
Critics say the richest individuals are able to skirt higher taxes through deriving much of their wealth from unrealized capital gains that aren’t taxed but can be borrowed against, and from asset sales that are taxed at a lower rate than wages.
Beyer on Thursday introduced legislation with Sen. Chris Van Hollen, D-Md., they call a “millionaires surtax” to try to capture more tax dollars from the wealthiest Americans.
Their bill would apply a 10-percentage-point tax to income above $1 million for individuals and $2 million for married couples. The tax would apply to capital gains and other investment income in addition to wage income. It wouldn’t touch unrealized gains, though Senate Finance Chair Ron Wyden, D-Ore., is among those who have pushed to tax such paper wealth annually.
During the hearing, Beyer asked if financial institutions reporting account inflows and outflows could actually lead to less IRS audits of certain taxpayers. Mazur confirmed that was the intent.