Decoding the Proposed New Invasive IRS $600 Bank Reporting Rule
The right to privacy is a fundamental human right in any democratic country.
It is also recognized by the UN Declaration of Human Rights, the International Covenant on Civil and Political Rights, and many other international and regional treaties.
Beyond the laws and proclamations, the right to privacy is rooted in a citizen’s inherent right to dignity.
In a democracy, the state is subordinate to the citizen hence the government must respect the rights and dignity of the citizen.
The citizen has the right to withhold any information that he or she deems unsuitable for public consumption, provided that the information is not related to any criminal activity.
It doesn’t have to always be highly sensitive salary or health records; a citizen may not the public to know of his or her the history of frivolous videos watched on YouTube. This is a right that cannot be violated.
Confidentiality is closely related to privacy.
While privacy pertains to the person, confidentiality pertains to information.
The Oxford Dictionary defines Confidentiality as “The process of and obligation to keep a transaction, documents, etc., private and secret, i.e., confidential; the right to withhold information, e.g. medical information, from others.”
At the very top of the list among the kinds of information that deserves to be confidential are bank records and financial transactional information.
However, the new House reconciliation bill would breach that confidentially by allowing the IRS to monitor the bank accounts of virtually every American. The rule would require financial institutions to report cash flows of every account with more than $600 in deposits or transactions.
This is obviously highly invasive and has caused a great furor.
When asked whether the IRS has the means to collect more information about taxpayers and bank accounts including cash flows: “Well, of course, they do,” Treasury Secretary Janet Yellen said. “Right now, on every bank account that earns more than $10 a year in interest, the banks report the interest earned to the IRS. That’s part of the information base that includes W2’s and reports on dividends in other income that taxpayers earned. So the collection of information is routine.”
The cited goal for this exercise is to prevent tax fraud.
The White House claims that “improved information reporting” would generate $700 billion in additional revenue over the next decade.
There are myriad more effective ways to reduce tax fraud and increase tax revenue.
The first and easiest way to increase tax revenues is by reducing tax rates and gratuitous regulations that encumber businesses.
It is a fundamental principle of economics that tax revenue received by governments is directly proportional to the economic prosperity of the country.
Following tax cuts instituted by President Trump, federal revenues hit all-time highs. This was because more people were earning and hence were paying taxes. The fact that the rates were lower didn’t reduce revenues, it increased them.
The cited goal hence seems like a falsehood, like a lot of claims that emanate from the Biden administration.
The onus to periodically send this information is on the financial institutions. Hence copious working hours will be wasted in this counterproductive effort. This will come at a considerable cost; it is very likely that the customer will end up paying the bill to facilitate his own torture.
So what is the real objective?
It is likely that the government will selectively apply this invasive law not only to target groups that they consider their political challengers but individuals as well.
All the government has to do is dig through the transactions of groups they consider their adversaries, such as the Republican Party or President Trump’s campaign or any major Gun dealer.
This will enable them not only to learn about the organization accepting the donations but the individuals donating.
Quite soon they can systematically target those donors in various ways, the government certainly has the wherewithal to do it.
It must be remembered under the Obama administration, the same IRS had targeted and aggressively scrutinized conservative nonprofit groups, especially various Tea Party-related groups.
Following outrage and legal action, the IRS was compelled to "express its sincere apology" for mistreating a conservative organization in their applications for tax-exempt status.
What is the likelihood that this will not occur again?
Studies have shown that human behavior changes quite drastically with the knowledge he or she is being monitored.
On paper, the citizen has the legal right to send money to any political party or any organization. However, when the citizen is aware that transactions are being monitored, he or she may hesitate to donate to a particular political party or to a cause that the government is opposed to just to avoid being subjected to harassment.
Thus the government has found an indirect way to defund organizations that they consider their rivals.
The bill is also seeking $80 Billion to bolster the IRS and tax enforcement which could mean more tax harassment. No business big or small enjoys being subjected to frequent exercises of intrusive scrutiny. Smaller businesses that cannot afford a team of accountants to deal with this may even choose to shut down in extreme cases.
Multi-national businesses will shift both their business and their money overseas where the laws are more conducive to economic growth.
The economy under Biden is already struggling; driving away businesses will most certainly be a total disaster.
The government has no business either being in business or monitoring business but the socialists believe in the exact opposite.
Perhaps driving away businesses is another way to push the welfare state where the grateful masses look towards the state for everything.
The establishment propagandist outfits who masquerade as the news media are obviously silent about this proposal.
The good news is that people and groups are standing up to this proposed tyranny.
A coalition of several dozen financial industry trade organizations dispatched a letter to various members of Congress, expressing their opposition to a proposal.
Some Republicans such as Senator Cynthia Lummis, Senator Tommy Tuberville, Congressman Steve Scalise are pushing back on the proposal. But this noise should have been louder and should have been in unison.
Giving any government body gratuitous access to the financial information of individuals is both dangerous and unconstitutional.
It is important to note that draconian changes once enforced are rarely undone. Once the government encroaches upon your private space, it seeks a step further and not backward.
Hopefully, the Republicans and a few right-minded Democrats will prevent this proposed draconian rule from becoming a reality.
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