This is the reason that the words “comprehensive reform” are the most dangerous words in Washington. Anything “comprehensive” usually means “too complex and too large to understand.” And “reform” is entirely dependent on one’s point of view. One person’s “reform” is another person’s “catastrophe.”
So when radical Democrats start getting enthused about “comprehensive IRS reform,” grab your wallets, draw the shades, and lock the door. No one’s bank account will be safe from scrutiny. And it’s likely to cost everyone as banks pass on the costs of the new “Financial Surveillance State” to consumers.
Does the Biden administration really believe they’re going to catch billionaire tax cheats by surveilling inflows and outflows from accounts as low as $600?
Thankfully, there’s been a lot of pushback from banks and consumers as the pressure has Democrats talking about raising the threshold to $10,000. But there’s much more in the “American Families Plan Tax Compliance Agenda,” that’s radically intrusive and will massively increase the power and influence of the already powerful Internal Revenue Service.
Ten grand is about how much you make working full-time in New York City on the minimum wage for four months, for eight months at the federal rate. It’s the average annual rent in West Virginia (the least expensive in the country), and less than half the average price paid for used vehicles in 2020. What $10,000—let alone $600—most decidedly is not is the preferred level of annual transactions among the tax-avoidant rich.
Yet that is how this surveillance is being sold on the left.
“Strengthening information reporting, as well as providing protected and sustained I.R.S. funding, would ensure that we focus enforcement on the biggest fish,” Sen. Elizabeth Warren (D–Mass.) claimed to The New York Times, presumably with a straight face.
The Obama administration tried to “close the tax gap” by requiring foreign financial institutions to report on transactions by Americans. What happened was predictable; the act brought in virtually no revenue and record numbers of Americans renounced their citizenship.
The Biden/Pelosi/Warren plan does not as of yet impose such steep self-reporting costs on individual taxpayers. To the extent that there are any details—many are being kicked down the road to future regulators—they have involved requiring banks and other third parties to cough up an annual number for inflows and outflows. But the negotiators have already agreed to Biden’s basic setup of giving the IRS an extra $80 billion over the next decade to hire 87,000 new employees and build out a “comprehensive financial account reporting regime” that would intrude into previously untrodden territory (such as Venmo accounts and cryptocurrency), so I’d take the over on regular Joes and Janes seeing a noticeable increase in scrutiny.
The American Families Plan Tax Compliance Agenda is part of the $3.5 trillion Build Back Better bill. Even though a substantial part of that bill is going to be removed in order to meet the demands of Senators Joe Manchin and Krysten Sinema, Biden and the Democrats are convinced that the plan is the linchpin of their tax agenda and some form of the plan will become law if the Democrats are successful in passing the Build Back Better bill.
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