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Illustration: Sarah Grillo/Axios

The Biden administration is aggressively defending its plan to invest $80 billion in the IRS to bring in an estimated $700 billion in new revenue, a memo obtained by Axios shows.

Why it matters: President Biden and his team view tax enforcement as one of the most politically palatable ways to help pay for their new spending plans, from universal preschool to free community college — especially in light of Republican criticism.

  • The memo shows the White House is coordinating its strategy with congressional allies and outside groups.
  • Collectively, they seek to dispel what they call “several pernicious myths” about enhanced reporting requirements.

Between the lines: The memo reads:

  • “Fact: This proposal does not mandate reporting of individual transactions to the IRS. ... The president’s proposal requires that banks report the most basic, high-level information on account inflows and outflows.”
  • While Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee, supports the administration’s proposal, he didn't include any new bank reporting requirements in his initial bill.
  • Conservative groups have seized on the plan by running ads against Democratsand Republicans — claiming Biden plans to unleash an army of snooping IRS agents.

But, but, but: Simply giving the agency more money to hire more agents won’t capture the amount of revenue the White House estimates is lost by Americans who underreport their earnings, known as the tax gap.

  • To close it, the Treasury Department needs new authorities, as well as cooperation from the banks.
  • Information-sharing would help it gather general information about account irregularities, such as an account showing $10,000 in income but $1 million routinely flowing in and out.
  • “Having this summary information will help flag for the IRS when high-income people underreport their income,” the memo states.

The big picture: Democrats are increasingly divided about how much revenue they can actually raise to fund their new priorities.

Go deeper: Treasury Secretary Janet Yellen weighed into the intra-party fight on Wednesday by asking Neal to include the new reporting requirements in emerging infrastructure legislation, the Washington Post reported.

  • “A reporting regime that is broad-based will better assist the IRS in targeting enforcement priorities on the high-end who accrue income in opaque ways,” Yellen wrote in her letter to the chairman.

Go deeper

Oct 17, 2021 - Politics & Policy

Scoop: Manchin's red lines

Illustration: Annelise Capossela/Axios

Sen. Joe Manchin (D-W.Va.) has told the White House the child tax credit must include a firm work requirement and family income cap in the $60,000 range, people familiar with the matter tell Axios.

Why it matters: While Manchin’s demands would dramatically weaken one of President Biden’s signature programs to help working families, they also would reduce the package’s overall costs.

Biden meeting with key House Democrats

President Biden. Photo: Drew Angerer/Getty Images

President Biden is hosting two separate in-person meetings with moderate and progressive House members at the White House on Tuesday as infrastructure negotiations continue, White House officials told Axios.

Why it matters: This is the latest in the president’s efforts to appease the more volatile parts of his party’s coalition as Democrats wrangle over how to cut his social spending proposal down from $3.5 trillion to closer to $2 trillion.

Updated 47 mins ago - Politics & Policy

Facebook paying up to $14M to settle employment discrimination claims

Photo: T.J. Kirkpatrick/Bloomberg via Getty Images

Facebook has agreed to pay up to $14.25 million to settle allegations that it discriminated against American workers by reserving positions for temporary visa holders, the Justice Department announced on Tuesday.

Why it matters: The settlement represents the largest civil penalty and monetary award that the Civil Rights Division has recovered in the 35-year history of the Immigration and Nationality Act's anti-discrimination provision.

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