Despite firm opposition from the American people, the Biden administration and congressional Democrats are still trying to insert IRS bank account snooping into the reconciliation bill, a top Treasury official said Wednesday during a panel sponsored by the Center for American Progress.
The Biden administration has proposed to give the IRS new power to automatically access bank account, Venmo, Paypal, and CashApp account inflows and outflows for all business and personal accounts with more than $600 in total deposits and withdrawals for what it describes as a “comprehensive financial account reporting regime.” This would inevitably increase audits on taxpayers making less than $400,000 per year.
Natasha Sarin, Deputy Assistant Secretary for Economic Policy at the U.S. Treasury Department, said Democrats were “trying to get this past the finish line.”
“It won’t surprise you to hear that I think that the information reporting provisions were an incredibly important part of the compliance agenda. And I think that without them there’s a lot of good that’s going to be done, but honestly a lot of good that we won’t be able to do unless we have some light into these opaque income streams.
And so I’m hopeful that what we’ll see over the course of the next few weeks — there’s a very committed group of senators — Senators Kaine, Warner, and Carper who are very committed along with of course Chair Wyden and Senator Warren and many others trying to get this past the finish line. I think there are ways that we can get there and that we’re going to be able to provide the IRS both information and resources that are going to fundamentally overhaul the way tax administration works in this country, all for the better.”
Not only are Americans creeped out by President Biden’s plan to have the IRS snoop on their bank accounts, the nation’s most prominent progressive tax policy group says the plan won’t even work.
The Tax Policy Center says the plan is “poorly conceived,” and will “bury the agency in a sea of unproductive information” and “won’t help” and “will fail.”
On Oct. 19 Tax Policy Center senior fellow Steve Rosenthal wrote on Twitter:
“Biden’s Treasury doubles-down on a poorly-conceived reporting proposal, casting its net far too wide, which may catch small businesses, but not the big fish (who cheat by stretching the tax law, not by hiding their cash flow). I tried to help at the start, but I gave up.”
On Oct. 20 Rosenthal wrote on Twitter:
“If Congress wants to collect more money from the rich, it must pass better tax rules, which measure and time income accurately and do not create ambiguities that aggressive taxpayers and their highly-paid advisers can exploit. Bank reports on aggregate cash flows won’t help.”
On Oct. 16 Rosenthal was quoted in The Hill:
Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, whose former director now works in the Biden administration, said the proposal is too expansive and thinks bank lobbyists “have touched a raw nerve” with their customers who are concerned about privacy.
“I think at the end of the day, this bank proposal will fail,” he said.
On May 3, Rosenthal wrote:
“In practice, the IRS’ task would be daunting and, in fact, bury the agency in a sea of unproductive information.
Biden’s plan is expansive: deposits and withdrawals must be reported for every account, individual or business, at every financial institution. Then, to construct taxpayer-specific information, the IRS must collate taxpayer-account information across many different financial institutions. That is because taxpayers often hold multiple accounts. Yet, whether collated or not, deposits and withdrawals are not income, unlike wages or interest. And deposits and withdrawals cannot be netted to calculate income, without substantial adjustments.”
On Oct. 18 Rosenthal was quoted in The Washington Post:
“It’s still a deeply flawed proposal,” Rosenthal said. “Even at $10,000, the Biden bank proposal is still too sweeping, throws a net very wide, and it’s hard to see what fish they want to catch here.”
Biden wants to increase IRS funding by $80 billion to double the size of the IRS and hire 87,000 new auditors and agents. This quantity of agents is so large that it could fill every seat in Washington DC’s Nationals Park, twice. It could fill the ancient Colosseum 1.74 times. 87,000 new IRS agents is more than the entire personnel on all 11 U.S. aircraft carriers.
Even Obama-era IRS chief John Koskinen – a longtime advocate of increasing the IRS budget – thinks Biden’s proposal is too much.
As reported by the New York Times:
“I’m not sure you’d be able to efficiently use that much money,” Mr. Koskinen said in an interview. “That’s a lot of money.”
Rather than fix the agency’s longstanding mismanagement, ineptitude and abuse problems, Biden’s approach will make the problem worse.
A recent HarrisX poll found that 70% of independents opposed the bank snooping provision.
Americans have a firm, categorical objection to the IRS snooping in their bank accounts.
Here are some quotations from a local news compilation from around the country:
“I don’t see what business it is of anyone’s what I spend out of my bank account.”
“No, it’s not their business. I already tell them enough.”
“I don’t feel that’s appropriate, that the IRS should be looking into people’s bank accounts.”
“They’re trying to get in to see every little thing you’re doing.”
“It could be a little invasive.”
“It’s kind of over the top and I just think that it’s an invasion of privacy.”
“Our bank accounts, you’d think would be somewhat private if you’re just a regular Joe Schmo making money week-to-week.”
“I do not think the government should be intervening in individual bank accounts.”
“It is personal information, that’s why we file taxes, too. You know, they should not have access to all that stuff.”
“I don’t think it’s right, it’s not their business what’s in my bank account.”
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