I still don’t like it. I don’t know if this is the last thing I write on this, but I’m going to try and roll up the knowledge into one thing. Which includes saying some quiet parts out loud.
The proposal, to receive reporting on bank inflows and outflows over a year, would allow the Govt to get insight on income that is more often than not, not being reported. That’s true. The big number is prolly 10% of GDP.
It’s going to allow them to set a compliance letter and audit flag algorithm in their ginormous data warehouse. The algorithm will go something like, INFLOWS – w2s -1099s = UNREPORTED CASH FLOW, > ARBITRARY THRESHOLD, TRIGGER INQUIRY LETTER / AUDIT NOTICE.
The proposal isn’t really targeted at the rich such that the Dems say that. Thats “bullshit”, a “lie”. It’s targeted at the side hustle shadow economy: rideshare drivers, sex workers, real and virtual flea marketers, odd jobbers, gray market contracters, airbnb. That’s why the proposal’s original threshold was $600, so that EVERYONE and EVERY BANK ACCOUNT would be reported on and fed into the IRS algorithm. The amount of $ the Govt could get from this macro is way more than what they’d get from the deci and hector millionaire crowd.
But also… such that this thing is not actually targeted at the “really rich”, it certainly is targeted at some people who do pretty well. When we go over the bridge to Hudson I’m in the habit of telling my boys, some of those mid-continent yachts belong to, yes, accountants, physicians, lawyers, and operational execs. The other half belong to construction contractors and some other types who have trade or retail oriented practices. Both those groups have habit of slipping themselves non-taxed distributions, and enjoy the utility of non “income” economic power.
$10k threshold is much more reasonable such that it actually targets those people and will exclude common peoples’ odd and end cookie jar money such that the original proposal wouldn’t have. And you really gotta wonder about the misanthropy that led the Democrat smarm-wonks to set the original threshold at $600. But it’s the effort here that’s obnoxious, with the reporting and the data scheme… not the thresholds themselves.
Tax compliance in this country is both very good, and more than a little abysmal right. No one, hardly, is in literal compliance. I flea market to the tune of a couple thou year, my buddy does cash side jobs, the restaurant up the road pays the kids for some hours in cash… Joe Biden dodged $500k in FICA taxes. But even people who are not actively seeking to non-report are non-reporting.
But almost universally, everyone is paying a meaningful amount. That’s kinda the way it should be.
Achieving 100% tax compliance isn’t possible, and it makes the perfect the enemy of the good. It’s not worth a trade off that brings enmity and delegitimization to the government that tries to do it.
I tellya something else as a statement of serious, high ideological observation and principle. Ya know, my deal is I don’t want to file a Schedule C on my ebay shit and pay another $500 in taxes. And also, I don’t want to be subject to a warrantless evaluation of my financial affairs, especially given the lax rights afforded to the accused in tax matters.
A higher principle articulated, that’s totally not self-justifying bullshit, is… the shadow economy is the price government pays for protecting cartels and enforcing illegitimate administration and licensing schemes within commerce, preventing otherwise earnest participants from competing in markets at the expense of the common consumer…. and the shadow economy is the price the government pays for enabling rent seekers to thrive in this scheme at the expense of the common vendor and consumer.
So the Govt trying to have their cake and eat it too on that with the taxes is BS. Sod off and leave it alone. Consider the whole thing a bone I get thrown for having to solve the problem of having to buy 2 EpiPens for $700 under state sanction in 2012, and understand I have many more examples than that…. Like health insurance and pharmaceutical prices in general.
It’s also an illegitimate ask cuz the government doesn’t need the money. Govt finance is legitimate, alright. Contriving a reporting scheme with a contrived tax capture number so that it can offset a fantasy expense number on a 10 year budget and making me/us abide by that under threat of sanction is not legitimate. It’s bullshit. The pols and the aides are creating odious real world implications there for their fantasy game of pretending serious people are evaluating whether a social effort is revenue neutral, and that it should be voted up or down over its revenue neutrality. Truth bomb: that’s complete fantasy, it’s not real.
More fantasy enabling: it’s not a legitimate exercise when the money is so insignificant ($160B a year say) that the government could just as well borrow it. And it’s not a legitimate exercise when the fact is the government enables their borrowing scheme with a certain amount of fiat money (QE, etc…).
So fuck it… there’s no reason anyone should be compelled to be in support of this fantasy charade lest they be uncivic. No, these are not taxes that have to be paid, and you’re not a bad person if you’ve been paying taxes but not remitting these ones. That’s the way it works in America, that’s the way gold collar Dems do it as well.
Mind all, there’s still no legislative text and I doubt it makes into the reconciliation bill when the alternative is to not have this fight. Again, your civic puritanism has moved into silo’d misanthropy if you’re a Dem who thinks this is a must have.
https://www.nytimes.com/2021/10/19/us/politics/irs-bank-account-reporting-requirement.html
https://www.wsj.com/articles/irs-bank-reporting-democrats-11634658560