Democrats to Scale Back Proposal Requiring Banks to Report to I.R.S.

The Biden administration has agreed to support a far more limited plan for the agency to try and crack down on tax cheats. Here’s the latest in business.,

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ImageSenators Elizabeth Warren of Massachusetts and Ron Wyden of Oregon are expected to unveil the revised plan on Tuesday afternoon.
Senators Elizabeth Warren of Massachusetts and Ron Wyden of Oregon are expected to unveil the revised plan on Tuesday afternoon.Credit…Stefani Reynolds for The New York Times

WASHINGTON — The Biden administration, bowing to an aggressive lobbying campaign by the banking industry and pushback from Republicans, has agreed to support a far more limited plan for the Internal Revenue Service to try to crack down on tax cheats.

Senate Democrats are expected to roll out a new proposal on Tuesday that would narrow the scope of information that banks must provide to the Internal Revenue Service about customer accounts. Under the new plan, banks would only be required to provide data on accounts with total annual deposits or withdrawals worth more than $10,000, rather than the $600 threshold that was initially proposed. The reporting requirement would not apply to payroll deposits for wage and salary earners or to beneficiaries of federal programs such as Social Security.

The narrowing of the plan comes after a steady lobbying campaign by banks and Republicans, who argued that the Biden administration’s desire to bolster the I.R.S. to shrink the $7 trillion so-called “tax gap” amounts to an invasion of privacy and government overreach.

Critics of the proposal have incorrectly suggested that the I.R.S. would be tracking information about individual transactions. The administration has said the I.R.S. would not monitor specific customer transactions but would instead use the bank account information to spot discrepancies between what individuals report on their tax returns and what their bank accounts show.

The Biden administration insists that audit rates for those making less than $400,000 would not go up and that the program is focused on collecting unpaid taxes from the rich.

The Treasury Department said that the Biden administration would back the narrower proposal because the I.R.S. already has information about American workers and retirees. While it would give the agency visibility into far fewer bank accounts, a fact sheet that will be released by Treasury on Tuesday and was obtained by The New York Times said that “only those accruing other forms of income in opaque ways are a part of the reporting regime.”

“We are pleased so many members of Congress are committed to ensuring the top 1 percent pay the taxes they owe, just like teachers, firefighters, and other wage workers,” Alexandra LaManna, a Treasury spokeswoman, said. “We look forward to continuing to work with them to enact this critical proposal.”

Senator Ron Wyden of Oregon, the Democratic chairman of the Senate Finance Committee, and Senator Elizabeth Warren, Democrat of Massachusetts, will unveil the new plan on Tuesday afternoon.

“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,” Mr. Wyden will say, according to prepared remarks. “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.”

Banks already submit tax forms to the I.R.S. about the interest that customer accounts accrue. But the new proposal would require they share information about account balances so that the I.R.S. can see if there are large discrepancies between the income people and businesses report and what they have in the bank. The I.R.S. could investigate the gaps to see if those taxpayers are evading their obligations.

The Treasury Department has estimated that its original proposal to require banks to report account balances, along with plans to beef up the enforcement staff at the I.R.S., could raise $700 billion over a decade.

In a letter to House Democrats last month, Treasury Secretary Janet L. Yellen urged lawmakers not to water down the information-reporting proposal. Originally, that part of the plan was projected to raise $460 billion over a decade. The Treasury Department estimated that the narrower plan that Congress had been considering could raise between $200 billion and $250 billion over that time.

The Treasury Department believes that those are conservative estimates and that the “deterrent effects” of the policies could still generate $700 billion of additional tax collection in next decade.

Despite the slimmer scope of the proposal, Republicans are not about to give up their line of attack.

Representative Marjorie Taylor Greene, Republican of Georgia, took to Twitter on Tuesday morning to declare, “Democrats need to keep their grubby little hands out of people’s bank accounts. The I.R.S. does not need to monitor how you spend your money. It’s none of their damn business.”

  • U.S. stocks rose in early trading on Tuesday, with the S&P 500 ticking up about 0.5 percent. The benchmark index is on track for its fifth-consecutive day of gains and is up nearly 5 percent since its Oct. 4 nadir after a slide in September.

  • Cryptocurrency prices rose, with Bitcoin reaching $62,500, according to CoinDesk. On Tuesday, ProShares will offer a long-awaiting exchange-traded fund on the New York Stock Exchange linked to Bitcoin futures, and Bitcoin has been trading at prices not seen since April.

  • A series of companies will publish their quarterly financial performance reports this week. United Airlines and Netflix will report their results Tuesday afternoon.

  • Johnson & Johnson reported that sales grew 10.7 percent to more than $23 billion in the third quarter compared with the same period last year. Shares of the pharmaceutical manufacturer rose 2.4 percent in early trading.

  • Procter & Gamble stock fell about 1.6 percent in early trading after the company reported it experienced higher commodity and freight costs during the three months ending in September.

  • Oil prices were little changed on Tuesday, with West Texas Intermediate, the U.S. benchmark, hovering around $81.60 a barrel. Oil futures are at seven-year highs and are up 70 percent this year amid a global energy crunch that is pushing prices higher for other commodities.

Oil prices are at seven-year highs, with the cost of West Texas Intermediate crude, the United States benchmark, up 70 percent this year, at more than $80 per barrel. It’s part of a global energy crunch that is pushing prices higher for all types of fuels, including natural gas and coal, the DealBook newsletter reports.

Price of W.T.I. crude oil

Many Wall Street forecasters believe oil prices are about to peak. Oil usage is up from 2020 but below what it was in 2019, when oil prices were lower than they are now. Analysts at Goldman Sachs last week predicted that the price of a barrel of oil could average $85 for the next few years.

But some traders are betting oil will rise much more. The most widely held option is one that pays out if oil rises higher than $100 a barrel by the end of December. Options trades with strike prices as high as $200 by the end of next year have also been made lately.

Who is right? The question of whether oil prices have nearly peaked or are about to rise much higher rests on what’s driving them up in the first place. Two possibilities:

  • Short-term, pandemic-induced disruptions: Demand for oil — like the market for many goods — is rising faster than producers can ramp up supply (or, in the case of OPEC, are willing to). If that is the case, oil prices are probably near their highs. With China’s economy slowing and the U.S. recovery hitting a weak patch, oil demand is not likely to grow very rapidly in the near future. That should give supply time to catch up, especially as pandemic disruptions fade.

  • A long-term mismatch between supply and demand rooted in climate change: A recent report from the International Energy Agency found that in order for countries like the United States to become carbon neutral by 2050, oil usage must peak by 2025. Yet, based on current investments, green power generation won’t be enough to supplant oil consumption until 2035. This year’s price jump could be the market’s warning sign about future energy crunches and price spikes.

Walkers in Sydney, Australia, where Covid restrictions recently eased.Credit…Lisa Maree Williams/Getty Images

The global economy’s setback from the pandemic is expected to largely stabilize by the end of next year, the Organization for Economic Cooperation and Development said Tuesday, with most major economies returning to a prepandemic growth path by 2025 at the latest.

But the rebound could be delayed if the pandemic drives a retreat from globalization, the organization said, as governments and business leaders begin to question whether global supply chains have been stretched too far. And governments must begin taking action to reduce the towering amounts of debt left behind by stimulus measures.

“Long-run scenarios assume no lingering growth effects” on the global economy beyond 2022, the organization said in a new report on the fiscal outlook through 2060. But that could turn out “to be an optimistic assumption if, for instance, the pandemic ushers in a de-globalisation trend.”

Businesses of all sizes have been facing delays, product shortages and rising costs linked to disruptions in the global supply chain. The pandemic has starkly revealed the dependence that Western nations in particular have on foreign supplies as diverse as medical equipment and semiconductors.

Policymakers in the United States, Europe and other nations are increasingly examining whether production should be brought back home to address national security and public health concerns. Such a shift, if it takes hold, could lead to a decline in labor productivity growth over time, the organization noted.

Countries are grappling with large holes in their finances as governments borrowed heavily during the pandemic from central banks and spent enormous sums to support businesses and individuals from the economic ravages of virus-induced lockdowns.

The national debt of major countries will balloon next year by as much as 25 percentage points of their gross domestic product because of pandemic-related effects, the report said. Most central banks have lent the money at ultra-low rates, so the interest payments that governments owe are manageable, assuming they are continuously rolled over, the O.E.C.D. report said.

Even so, nearly all of the 35 countries that are members of the organization, including United States and European nations, will need to rein in spending and start collecting more revenue for national coffers within the next couple of years if they are to stabilize the share of public debt over the long term, the report said.

The organization said it was not recommending that governments raise taxes to make up for all the shortfall. But the analysis in the report showed that all O.E.C.D. governments would need to raise taxes to prevent gross government debt ratios from rising over time.

And despite the financial burden brought on by emergency government spending during the pandemic, the direct fiscal impact pales in comparison to looming long-term expenses like funding pensions and health services as societies age, the organization said.

Unless governments start reducing their debt, “population aging and the rising relative price of public services will keep adding fiscal pressure onto O.E.C.D. countries in the decades ahead,” the report concluded.

Supply chain woes caused by the coronavirus pandemic are causing delays, product shortages and rising costs, frustrating businesses large and small. And consumers are confronted with an experience once rare in modern times: no stock available, and no idea when it will come in.

Peter S. Goodman, a global economics correspondent for The New York Times, answered common questions about what’s going on with the supply chain:

4 Questions About the Supply Chain

Peter S. Goodman

Peter S. GoodmanReporting on global economics ?

4 Questions About the Supply Chain

Peter S. Goodman

Peter S. GoodmanReporting on global economics ?

Spencer Platt/Getty Images

Supply chain issues have made all kinds of products — paint and lumber, certain foods, clothing and electronics — harder to find.

I’ll walk you through what to know ->

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Tokamak Energy is beginning to license the know-how behind its powerful magnets, which it uses to contain and compress the superheated gas.Credit…Andrew Testa for The New York Times
A video image from Tokamak Energy’s fusion device, as a powerful beam is fired into superheated gas.Credit…Andrew Testa for The New York Times

At the laboratory of Tokamak Energy, in a business park outside Oxford, England, there is a warning on the public address system every 15 to 20 minutes that a test is coming and everyone should stay out of the room with the fusion device, which is 14 feet high with thick steel walls. There is a whirring sound that lasts about a second. Then a monitor shows an eerie pulsing video of the inside of the device as a powerful beam blasts into superheated gas known as a plasma.

During the test, Tokamak’s prototype machine reached 11 million degrees Celsius. The scientists figure they need to reach 100 million degrees Celsius, or about seven times the temperature at the core of the sun. They expect to get there by year’s end.

No one knows when fusion energy will become commercially viable, but rising alarm about global warming is driving private investments. The British government even recently saw the need to issue regulations for fusion energy. READ THE ARTICLE ->

A Starbucks location that is being used for training in Cheektowaga, N.Y. Workers at three other stores in the Buffalo area are seeking to unionize.Credit…Libby March for The New York Times

Workers and organizers involved in an effort to unionize Buffalo-area Starbucks locations say the company has imported “support managers” as part of a counteroffensive intended to intimidate workers, disrupt normal operations and undermine support for the union.

Starbucks says the additional managers, along with an increase in the number of workers in stores and the arrival of a top corporate executive from out of town, are standard company practices. It says the changes, which also include temporarily shutting down stores in the area, are intended to help improve training and staffing — longstanding issues — and that they are a response not to the union campaign but to input the company solicited from employees.

“The listening sessions led to requests from partners that resulted in those actions,” said Reggie Borges, a Starbucks spokesman.

Many of the ways Starbucks has responded in Buffalo — where union backers seek to become part of Workers United, an affiliate of the giant Service Employees International Union — are typical of employers, reports Noam Scheiber, The New York Times’s labor reporter. The measures include holding meetings with employees in which company officials question the need for a third party to represent them.

But some of the company’s actions during the union campaign are unorthodox, according to labor law experts. “A huge increase in staffing, shutting down stores, it’s all unusual,” said Matthew Bodie, a law professor at St. Louis University who is a former labor board attorney.

A recent visit to a Starbucks near the airport, where workers have filed for a union election, turned up at least nine baristas behind the counter but only a handful of customers.

“It’s insane,” said Alexis Rizzo, a longtime Starbucks employee who has been a leader of the organizing campaign at the store.

Ms. Rizzo said the number of employees in the store made those who predate the union election filing feel outnumbered and demoralized. Starbucks said the additional personnel were intended to help the store after an uptick in workers who were out sick.

The prospect that Starbucks workers in Buffalo could form a union appears to reflect a recent increase in labor activism nationwide. READ THE ARTICLE ->

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