Revived by social media posts, interest has been spurred regarding the American Families Plan (AFP). Announced by the White House on April 28, 2021, this program followed the enactment of the American Rescue Plan, which was put into place in response to the COVID pandemic and provided relief to American families and communities.
To introduce the AFP, U.S. President Joe Biden used his catch phrase “We need to build a stronger economy that does not leave anyone behind – we need to build back better.” President Biden also cites the middle class as the “backbone of America” and promotes the AFP as a way to make it “easier for American families to break into the middle class, and easier to stay in the middle class.” It is also purported by the Fact Sheet provided by the White House Briefing Room that President Biden wants to enable those who have dropped out of the workforce to rejoin and stay in the workforce.
The Fact Sheet tied the AFP to the American Jobs Plan (AJP), touted to provide “millions of good jobs, rebuild our country’s physical infrastructure and workforce, and spark innovation and manufacturing here at home.”
Combined, the two programs are set to look toward the future, as well. Through the AFP, the country would “reinvest in the future of the American economy and American workers,” it will help families cover basic expenses, reduce health insurance premiums, and lower child poverty.
To do this, the Plan looks to “[a]dd at least four years of free education,” “[p]rovide direct support to children and families,” and “[e]xtend tax cuts for families with children and American workers.” Through this, the White House was proposing $1.8 trillion in spending: “$1.8 trillion in investments and $800 billion in tax cuts for American families and workers” over the next 10 years.
The proposed method of paying for this additional spending is through tax increases on the “rich.” “[T]he President will be proposing a set of measures to make sure that the wealthiest Americans pay their share in taxes, while ensuring that no one making $400,000 per year or less will see their taxes go up.”
The figure of $400,000 as a level to not have taxes rise is interesting as the Presidential Salary is set by Law at $400,000 per year at this time.
While the White House highlights the benefits of the AFP, a fact sheet provided by the U.S. Department of Treasury outlines more of how the Plan would be paid for. Opening “A well-functioning tax system requires that all taxpayers pay what they owe,” the Treasury Press Release of the same day touts “a series of proposals in the American Families Plan that overhaul tax administration and provide the IRS the resources and information it needs to address tax evasion.”
Through these proposals, the IRS will have expanded resources to stop sophisticated tax evasion, expanded information-gathering capabilities, and overhauled technology to help it identify tax evasion. These expanded and overhauled capabilities will allow the IRS to “[i]mprove taxpayer service and deliver tax credits,” and better “regulate paid tax preparers.”
The fact that this “[p]rovide(s) the IRS with more complete information” is what has social media abuzz about the expanded capabilities. Through this measure, the IRS will be given “a mechanism for cross-checking the accuracy of…tax filings” as a way to improve compliance with tax laws. The aim, according to the Treasury, is to “provide the IRS information on account flows.”
Describing that this process would be done “without any increased burden for taxpayers,” what it does do is to leverage “information that financial institutions already know about account holders, simply requiring that they add to their regular, annual reports information about aggregate account outflows and inflows.”
Citing the benefit of allowing IRS agents to “improve audit selection so it can better target its enforcement activity,” this would require that banks report deposits and withdrawals of any sort to the IRS.
It is currently Federal Law that banks report deposits, withdrawals or other transactions of $10,000 or more. This would expand IRS authority to review all transactions through a financial institution – bank account or credit account – regardless of innocuity. While some reports have put the limit on deposits of $600.00, the initial reports on the AFP nor any follow-ups have confirmed this figure.
Through the American Families Plan, President Biden is requesting that any account holder, regardless of their taxpayer status, have their bank account information provided to the IRS without consent. In that, the White House wants to know your bank account information.
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