ICYMI: CBPP Highlights Importance of Biden Proposal to Ensure Wealthy Pay What They Already Owe

Today, the Center on Budget and Policy Priorities published a highlighting how the President's tax enforcement proposals will target the super wealthy's underreported income.

CBPP writes: "Critically, the Biden plan also provides for a set of financial reporting rules that would help the IRS identify unreported income and reduce the likelihood that wealthy households underreport their income in the first place, which the House should add as the legislative process continues. The information reporting component would raise $460 billion — the majority of the revenue in the Biden tax gap plan — according to Treasury."

The report cites a group of former IRS commissioners: "Research shows that when the IRS has access to third-party reporting, compliance rates top 95 percent. Without third-party information reporting, compliance rates are below 50 percent. Reliable information is critical to an effective and fair tax system."

The reporting highlights the following key points about the information reporting component of the plan, emphasizing that it "is specifically designed to impose no burdens on taxpayers, to protect privacy, and to shield people with low or moderate incomes from higher audit rates."

1. It places no new burdens on taxpayers and is simple for banks to implement.
2. It is designed to protect privacy.
3. It advances racial equity.
4. Its low account threshold will prevent gaming.
5. More robust information reporting is strongly in the interests of honest taxpayers and business owners."

Read the full report here.