October 19,2021

Wyden Statement on Proposal to Ensure Wealthy Tax Cheats Pay Taxes Owed

As Prepared for Delivery

Washington, D.C. – Senate Finance Committee Chair Ron Wyden, D-Ore., today delivered remarks on Democrats’ revised proposal to ensure wealthy tax cheats pay taxes owed:

Good afternoon. Thank you to Senator Warren for joining me today to provide an update as to where we are on the information reporting proposal and respond to the torrent of lies we’re seeing from Republicans and industry.

First, let’s set the table. IRS Commissioner Rettig—a Republican appointee—came before the Finance Committee earlier this year and said that the total amount of taxes evaded each year could be as high as $1 trillion.

Cheating by those at the top is one of the major causes of that tax gap, and a big reason why is that the automatic reporting and strict rules that apply to typical working taxpayers do not apply to many at the top whose income is derived from opaque business structures.

Commissioner Rettig reiterated that the agency is completely outgunned when it comes to examining these opaque business structures. This means tax cheats are able to hide their cheating in the shadows.

It’s yet another way the tax system is mandatory for the working person, and voluntary for the billionaire. Working people pay their taxes voluntarily because they know their employer is sending those numbers to the IRS. The wealthy business owners are on the honor system. 

The argument against information reporting is always the same, and it’s always wrong. Despite what its opponents say, what President Biden and Democrats have proposed is focused on rooting out tax cheating at the top.

Senate Democrats have made a number of changes to the administration’s original proposal, and I’ll just run through them quickly.

No additional reporting requirements would apply to accounts with deposits and withdrawals under $10,000. And for most people that’s $10,000 on top of your paycheck.

So, if you don’t have $10,000 above your paycheck, Social Security income, or the like coming in or going out, there’s no additional reporting. 

We’ve also addressed the scenario where an individual spends a significant amount of savings for a major purchase. There will be no additional reporting in this scenario, as long as the amount of money coming into the account does not exceed wages +$10,000.    

The proposal is also not about anybody’s specific transactions—they wouldn’t be reported.

It also wouldn’t create any new surveillance of digital currency.

This proposal is about reporting only two numbers once per year. The total amount going into an account, and the total amount going out of it.

This is where we’ve seen the most egregious lies from the Republicans so let me repeat: all that would be reported is two numbers. The IRS would not know what any taxpayer is purchasing.

Now, Wall Street banks are predictably running around hair-on-fire about this proposal.

The biggest and most powerful banks in the world want Americans to believe they're still relying on legal pads and an abacus to perform basic functions. No one buys that.

These institutions are already required to report just $10 of interest to the IRS—$10 of interest earned by each account.  So the idea that adding two boxes to a form they already send to the IRS would end western civilization just doesn’t hold up.

Lastly, Commissioner Rettig pointed out recently that this plan could actually reduce the odds of an audit for middle-class taxpayers. To make this point crystal clear, when you combine this proposal with our proposal to increase funding for the IRS, we’re adding language to ensure enforcement efforts are focused on the very wealthy.

Now, I want to step back for a minute and comment briefly on the larger political landscape. The main reason Republicans have latched on to this issue as the one to lie about every day is because they know their tax agenda is a political loser.

The American people overwhelmingly want to ensure mega-corporations and billionaires pay their fair share, so Republicans have largely given up on their tired-trickle down arguments. They don’t want to go out and say billionaires should pay no taxes, so instead they go out and lie about this proposal.

Another factor at play here is Republican donors and allies want nothing more than a crippled IRS unable to police their cheating.

It was just a few months ago that Senator Rob Portman—no one’s idea of a liberal Democrat—led an effort to include increased funding for the IRS in the bipartisan infrastructure framework.  

That effort was swiftly killed by the Republican tax cheat lobby. So that’s what this is really about—Republicans trying to protect their tax-cheating donors and allies.     

The bottom line is, wealthy tax cheats are ripping off the American people to the tune of billions and billions of dollars per year. Tax cheats thrive when the reporting rules that apply to them are loose and murky. Democrats want to fix this broken approach and crack down on the cheating at the top.