US Treasury Department Seeks to Track Financial Transactions of Personal Bank Accounts Over $600: The Biden Administration plans on taking unprecedented looks at individual's bank accounts.

In May, the Treasury Department released the Biden administration’s revenue proposals for fiscal year 2022. One aspect of this document that has gone under-reported is the administration’s new plan for reporting requirements for financial institutions.

The document is unequivocal about the administration’s goal for financial reporting, stating, “this proposal would create a comprehensive financial account information reporting regime.”

The Biden administration’s goal here is to increase tax revenue by making sure no income avoids detection. How will the administration do this? It plans to leverage financial institutions like banks.

“[T]his requirement would apply to all business and personal accounts from financial institutions,” the proposal reads, “including bank, loan, and investment accounts, with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600.”

In other words, financial institutions will report any flows in and out of business and personal accounts of more than $600.

This reporting requirement is far above any current requirements on financial institutions. As the document itself states, currently only information for certain types of revenue (including 1099 forms MISC, NEC, and K) require reporting.

Some may view this proposal by the Biden administration positively. After all, this isn’t an attempt at raising taxes. The goal of this policy is to ensure individuals pay what is legally required, isn’t it?

There are two issues with this way of thinking.

Cutting off Air to the Market

The first issue is highlighted by economist Ludwig von Mises’s insight that “capitalism breathes through [the] loopholes.” The great innovations and improvements in well-being made available through capitalism were not generated in a loophole-free system. Oftentimes, the most important innovations begin as small start-ups with razor thin margins. As loopholes close, the chance of these risky start-ups succeeding declines.

Entrepreneurs are not ignorant to the barriers of regulations and taxation. When something is taxed, you get less of it. If any entrepreneurs are right on the fence of whether a new business venture is likely to be worth it, increasing costs even a little bit may be enough to persuade them otherwise. Economists call this “being on the margin.”

Avoiding taxes and reporting on small dollar transactions (either intentionally or unintentionally) is another form of loophole. De jure businesses are required to follow strict tax reporting rules, but, much like driving the speed limit, the de facto reporting often departs from the official rule.

To understand the danger of making businesses comply with tax law to the letter, consider how difficult it would be for businesses to do so. The tax code is now so long that nobody, including government officials, are sure of its length. How can business-owners be sure they’re complying with a document of unknown length? Put simply, they can’t.

Therefore, not only will these increased financial reporting requirements raise taxes on entrepreneurs on the margin, they will also force businesses to expend more time and resources ensuring they pay the proper amount of taxes. Any tax audit with access to every account transfer over $600 will crush businesses without a team of accountants or lawyers able to justify every transfer.

The burden of this policy, then, will fall primarily on small businesses without access to a massive internal legal team. A policy that punishes small businesses like this may be good for large corporations, but it’s bad for market competition.

As Mises noted, capitalism suffocates without loopholes.

The End of Financial Privacy

The second issue associated with Biden’s proposal is its effect on financial privacy. The administration’s focus on increasing financial reporting is becoming a consistent theme. For example, the “information reporting regime” document also includes proposals for cryptocurrency reporting which can be seen as a precursor to the crypto reporting requirements shoehorned into the “infrastructure” bill.

The increase in financial scrutiny provided by access to every transaction greater than $600 associated with personal accounts would provide an unprecedented look into the finances of many Americans. Even the powerful political will behind the 2002 “Patriot Act” only led to requirements that banks report suspicious transactions of $5,000 or more.

Much like small businesses, most individuals don’t have access to a team of lawyers and accountants the same way DC politicians and bureaucrats do. As such, these new requirements are likely to hurt poor and middle income Americans whose primary source of income is non-traditional. This is unsurprising given the Biden administration’s record of threatening gig work, for instance.

Some may argue that privacy is unnecessary because you have nothing to fear if you have nothing to hide. But, again, individuals cannot be expected to perfectly comply with a document of unspecified length. Unfortunately, as the government approaches perfect information, perfect compliance becomes the standard.

At one time, perhaps community banks or other small financial institutions interested in keeping customers around could’ve provided resistance to this by generating political pushback or work-arounds for customers.

However, government policies have effectively destroyed a more decentralized network of financial institutions. Since the early 1990s the number of small banks has fallen from over 10,000 to below 5,000. Now politicians are proposing to leverage their relationships with the few big players who are “too big to fail” to examine every aspect of Americans’ finances.

Especially with the lockdowns, the federal government already has small businesses, independent contractors, and the economy in general in a stranglehold. This new “Information Reporting Regime” will only tighten its economically lethal grip.

no problem- enjoyed reading through it- it is very disheartening what is going on- and you nailed what is happening- in a way not too many people realize- There is a systematic, carefully planned out hostile takeover of this country by marxist leaders hell bent on destroying everything we stand for, as we speak-

It’s so bad that traitors like gen milley are not tried for blatant treason (or even, at the very least, investigated for the treasonous claims he made, according to woodward), but are elevated by the left and protected-

That Violent domestic terrorist groups antifa and blm that have caused billions in damages, assaulted people violently, killed people even, while cops are told to stand down and do nothing-

while peaceful protestors who were escorted through the capitol building by armed cops, and who, at worst, broke some windows- and perhaps fought back to defend themselves when they were attacked, are treated like domestic terrorists

there is an extremely evil wind blowing by the left- and far too many people accept it willingly -

This is a far cry from the country I grew up in (I tuned in to see the music awards the other night as i hadn’t seen any music videos in a couple of decades, and wondered what them Music was like today- Holy Cow!~ I had to turn it off- it was absolutely vile, immoral and disgusting- nothing but not so soft pron- gay sex acts, demonic symbols, near naked women- and the biggest applause of the evening was when the crowd lit up with excitement and glee for the singer who simulated homosexual sex with Satan~ They were reveling in his homosexual music act- I was just dumbfounded how low MTV has gone- and how eagerly and gleefully the people accept it-

ok enough of that- It was just shocking to see what kids are watching these days- We’ve gone from controversial Elvis to signers who now simulate homosexual sex with Satan in front of adoring fans who were grinning ear to ear when the singer took the stage-

Thankfully though we still have a large remnant of believes left- Perhaps God won’t turn His face from us-

the point is like rlmoral pointed out, if it’s all digital, they can ‘find a crime’ at will- Yes, lots of folks bank digitally, pay bills digitally etc- but it’s a very slippery slope- Under a Rogue leadership anyone who doesn’t comply with the marxist agenda can be ‘investigated and indicted’ by a powerful government with loads of $$ to financially cripple the person even if they’ve done nothing wrong- with a cash society, not monitored, it’s harder for the government to accuse- because there are no records of transactions

AS lot of folks still pay with money- but the left want everything digital- or near everything- for the purpose of control- They can see who you pay- when you pay them etc- ad if transfers are going to conservative causes or businesses that they don’t approve of, they will punish the person for it- it’s already happening-

it’s just that the m ore digital they make things, the more they can control and punish- even when the person has done nothing wrong-

Eventually, if you don’t take the mark and bow down, your accounts will be locked or worse, you’ll be investigated and financially crippled and your cards will be cancelled- Course they won’t be able to stop physical money transactions-

EBH brings up some very good points too- it’s all about control and punishment-

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