U.S. banking lobby groups oppose proposed tax reporting law
The largest US banking lobby groups banded together on Friday to make another push to kill a proposed bank account reporting law being prepared as part of a Congressional reconciliation package.
In a letter to US House of Representatives Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy, lobby groups said the proposal would create “prestigious challenges” for large financial services firms, increasing tax preparation costs for Americans and small businesses. will increase, and will create. Serious “financial privacy concerns”.
The S&P 500 energy sector is (.SPNY) down 12.3% for the quarter-to-date compared with a 3.7% gain for the S&P 500 (.SPX), which stands near record highs. That contrasts with the sector’s performance in the first quarter of the year, when it zoomed 29.3% on expectations that a vaccine-fueled economic rebound will boost energy demand.
“While the stated goal of this vast data collection is to uncover tax evasion by the wealthy, this proposal is not aimed at that purpose or even remotely aimed at that population.”
The proposed domestic account reporting requirement in the $3.5 trillion House package is becoming a pressing issue for the banking industry, which is opposed to tax reporting changes being pushed forward by Democrats.
The new proposal would require financial services companies to track and deposit inflows and outflows above a minimum threshold of $600 from each bank account over the course of a year to the Internal Revenue Service (IRS), including a breakdown for cash.
The proposal also opens up significant privacy concerns, which lobbyists said would discourage taxpayers from participating in the financial services system and undermine efforts to include vulnerable populations and unaffiliated families.
Reporting by Michelle Price in Washington DC and Sohini Podar in Bengaluru; Editing by Anil D’Silva
The decline, which has outstripped a 2% fall in the price of Brent crude, suggests some investors believe the U.S. economic recovery may have peaked in the face of a coronavirus resurgence, leading them to focus on a looming unwind of the easy money policies that have helped the S&P more than double since its March 2020 lows.
Other reopening plays such as airlines and hotels have also stumbled, as investors rotated back into the high-growth technology stocks that have led the markets for years. The S&P technology sector (.SPLRCT) is up 6.8% this quarter.
“The rise of the number of cases of the delta variant has led to a resumption of the outperformance of stay at home defensive stocks like tech,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab. “You’re seeing reopening stocks underperform significantly.”
Investors will get additional readings on the health of the U.S. economy next week with the release of consumer price index figures, retail sales, and a measure of consumer sentiment.
For now, many are gauging to what degree a slowing economic bounce could impact asset prices.
Morgan Stanley cited concerns about slowing growth when it lowered its recommendation on U.S. equities in the past week, while economists at Goldman Sachs cut their estimate of U.S. economic growth in the third quarter to 5.5% from 9% in late August.
Those worries have weighed on energy stocks, with companies like Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) down more than 13% for the quarter-to-date.
“It’s definitely been a painful trade the last couple of months,” as investors moved out of crowded positions in energy stocks that rallied at the start of the year, said Garrett Melson, portfolio strategist for Natixis Investment Managers Solutions.
Some investors, however, remain bullish on energy out of expectations that eventual declines in coronavirus case counts will buoy economic growth.
Melson has been increasing his positions in energy stocks because believes that growth will continue to be comparatively robust, leaving the economy expanding at a level that will support oil prices.