Reconciliation bill: Manchin says Dems' IRS bank reporting proposal 'screwed up,' won't be in final bill

IRS bank reporting proposal ‘contradicts’ basic US principles: Hoenig

Mercatus Center Distinguished Senior Fellow Thomas Hoenig discusses Biden pushing his economic agenda amid rising inflation and the Democrats raising proposed IRS bank reporting threshold to $10,000.

Sen. Joe Manchin Tuesday said Democrats' proposal for banks to report the inflows and outflows of many bank accounts to the IRS is "screwed up" and won't be in the final bill, despite what many Democrats in Congress had hoped. 

"I said, ‘Do you understand how messed up that is to think that Uncle Sam is going to be watching?’" Manchin, D-W.Va., said he told President Biden during their meeting Sunday. "I said, Mr. President, I don't know what happened. This cannot happen. This is screwed up."

Manchin made the comments at an event for the Economic Club of Washington, D.C.

Manchin described bewildered Biden staffers who were, "all looking at each other back and forth, 'Who in the hell did this one?'"

Manchin said the president said, "I think Joe's right on that."

Sen. Joe Manchin, D-W.Va., walks through the U.S. Capitol in Washington, U.S., October 21, 2021. Manchin said Tuesday morning a proposal to report inflows and outflows of Americans’ bank accounts won’t be in Democrats’ final reconciliation bill. REUT (Reuters Photos)

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"So I think this one's gonna be gone," Manchin said, meaning the proposal won't be included Democrats' final reconciliation bill. 

Manchin's comments follow efforts from Democrats in the past two weeks to push the proposal, which has been championed by Treasury Secretary Janet Yellen, not only to fund their bill but also to close the tax gap. 

The proposal initially would have applied to all bank accounts with more than $600 inflows and outflows over the course of a year. Banks would be required to send the IRS how much money went into the account and how much came out over the period of a year. 

But after massive backlash, Democrats said it would only apply to people who get $10,000 in deposits to their bank accounts that are not wages per year, or who spend at least $10,000 more than their wages per year. 

House Democratic Caucus Chair Rep. Hakeem Jeffries, D-N.Y., talks to reporters following the weekly Democratic Caucus meeting in the U.S. Capitol Visitors Center on June 29, 2021 in Washington, DC. Jeffries and other top Democrats have emphasized the (Chip Somodevilla/Getty Images / Getty Images)

House Democratic Caucus Chairman Hakeem Jeffries, D-N.Y., defended the proposal on Tuesday after being asked about Manchin's comments. But he and Caucus Vice Chairman Pete Aguilar, D-Calif., appeared to leave the door open to ditching the proposal for other revenue raisers.

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"North of 95% of everyday Americans, who are salaried employees, who work nine to five jobs, pay their taxes because of deductions that are taken out on a weekly basis," Jeffries said in response to a question from Fox News. "We do need to close the tax gap… That tax avoidance [by the rich] is largely taking place by the wealthiest amongst us who've got super lawyers and accountants, and are engaged in a regular practice of trying to avoid paying taxes that they lawfully owe." 

Jeffries added: "Figuring out where the common ground is in the House and the Senate is an important part of the process."

Treasury Secretary Janet Yellen attends the House Financial Services Committee hearing in Washington, September 30, 2021. Yellen has been the driving force behind a proposal to have banks report Americans’ bank inflows and outflows to the IRS, a prop (Al Drago/Pool via REUTERS / Reuters Photos)

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"Members have raised similar concerns about this as a burden to small financial institutions. We understand that. But as the chairman mentioned this is about tax avoidance," Aguilar added. "We'll work on the details of what that will look like."

Democrats are scrambling to reach a deal on a framework for their reconciliation bill before President Biden leaves the country Thursday. This, Democratic leaders hope, will allow progressives to stop holding the bipartisan infrastructure bill hostage in the House and give the president a victory before he goes to a climate summit in the United Kingdom. 

It's not clear that will be possible, as there are still major disagreements on several issues in the sprawling, potentially multi-trillion-dollar bill. 

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