The tax plan that President Biden has been pushing as a way to close the gap between taxes owed and taxes paid is finally being exposed for what it really is.
First, it seems odd to us that a President who is about to be investigated for co-mingling funds with his son’s crooked business dealings, would want to push for such an invasion into individual privacy.
But with that said the plan that the President has come up with will completely decimate individual freedoms and overwhelm the current IRS system while potentially moving all financial decisions over to the IRS making it the most powerful entity in the country.
It starts with tracking every transaction in every bank account that has $600 or more in it.
A lot of folks have confused this part with the $10,000 transaction reporting minimum. Many I speak with this is an attempt to move the transaction reporting down to $600.
But that is NOT what this is. This is an attempt to track every single transaction in and out of an account that has a balance of $600 or more. So this means literally every single transaction from every single account will be tracked and stored within the IRS databases.
This opens the door for monitoring just about every facet of our lives. A new means to track every decision we make and then use that information to determine who gets a loan, or who gets food, based on the actions that we are being tracked for through every transaction that passed through a bank account.
COVID Killed Cash. Many establishments don’t take cash any more and this alone forced three times the amount of transactions through the banking system.
The Power that the IRS will have after this is implemented will be unfathomable.
President Biden’s tax compliance initiatives seek to close the ‘tax gap’ between taxes owed to the government and the taxes actually paid. To achieve this, financial institutions would have to provide information about the total outflows and inflows for all accounts holding $600 or more to the IRS.
All of this sounds innocent enough, even laudable, when the IRS claims that this would add $700 billion in additional tax revenue over the next decade. But the IRS will only be able to handle all of this essential information if its aged IT systems are updated, which will inevitably cost billions. But the administration believes the investment to update the system and find sufficient, highly skilled personnel will bring quick returns.
Biden’s proposal has the enthusiastic support of Treasury Secretary Janet Yellen, who wrote a letter to House Speaker Nancy Pelosi (D-Calif.) and Richard Neal (D-Mass.), chairman of the House of Ways and Means Committee, endorsing the idea.
Never mind all that. The real result, given Biden’s $600 threshold, will be to flood the IRS with reporting on over 140 million bank accounts and to end financial privacy, given that the IRS cannot handle the tax returns it already receives. The Treasury notes that it already receives third party confirmation of wages, salaries and pensions when taxes are deducted at-source. In these cases, compliance rates are over 95 percent. That applies to over 50 percent of those in employment and to millions of pensioners.
So why insist that financial institutions should report on all the accounts they manage? What is the point of burdening them with another layer of reporting? It looks as though the Treasury is cutting off the branch on which it is sitting. Such a requirement has nothing to do with tax evasion by complex partnerships or the cleverly constructed tax schemes for the well-off or for multinational companies. The additional avalanche of reports could simply get in the way.
Some Democrats are trying to relieve banks of some of the burden by setting the threshold at a somewhat higher level, but still very low, perhaps $10,000. If so, they would do well to examine those in the lowest levels of income (although not all in these brackets will have a bank account). They would soon find that the $10,000 threshold easily catches individuals at the lowest federal poverty level of $12,880, and that over 80 percent of their income is spent on necessities such as housing, transportation, food, healthcare and education.
The proposal gives the IRS extensive access to an individual’s account. It is difficult to know why the administration wants to know the contents of anyone’s grocery bill. But it is easy to see the temptation it would create for bureaucracies to interfere in your life. Maybe you are buying too much beef or sugary drinks. Maybe you are buying too much gas or making political donations they do not like.
Furthermore, the IRS already requires information, not only about every employee or contractor, but also about anyone who pays or receives interest or makes capital gains. So what is the underlying reason for this extension of reporting? The next step could be to tap into the Automated Clearing House system, which has the image and the data for every check — physical or electronic — and covers routing numbers, accounts, amounts paid and the payee. All the bank has to do is to send a copy of whatever it sends to the ACH service, to the IRS. The temptation for the government could be to use the more precise data on patterns of expenditure, to interfere in people’s private affairs. Such big data is always valuable … for private companies as well.
Individual privacy over bank accounts and expenditures should be safely guarded. Biden’s proposals would end it. But that is not the only source of risk. Central banks holding digital currency within individual accounts would also have enormous powers, if the Federal Reserve succumbs to such pressures. It would lead to the creation of a huge bureaucracy with the power to decide what loans should be made and to whom.
That would, of course, make the power of the IRS much greater, at the price not only of privacy, but also control over the money each individual has earned, or, to which they are entitled.
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