Posted on 10/19/2021 1:04:06 PM PDT by Red Badger
Secretary of the Treasury Janet Yellen has relented in response to backlash over a controversial proposal by Democrats that would have allowed the IRS to gain information from any American bank account with more than $600 of activity in a year.
The measure initially came to light as a part of Democrats’ $3.5 trillion reconciliation bill. Trying to head off concerns from moderates, Democratic leaders and rank-and-file lawmakers have desperately marketed the bill as being completely paid for with no substantial effect on the deficit or national debt.
One proposal to achieve that end was the IRS measure. Despite immediate backlash, Speaker of the House Nancy Pelosi (D-Calif.) and Yellen adamantly defended the planned IRS overhaul.
Yellen, the former Chairwoman of the Federal Reserve who took control of the Treasury in January, said the measure is designed to target wealthy Americans who hide income from the IRS. Because of the measure, Yellen said the IRS will be able to collect more taxes from the wealthy and close the “tax gap.”
“We have a tax gap that over the next decade is estimated at $7 trillion, namely a shortfall in the amount that IRS is collecting due to a failure of individuals to report the income that they have earned,” Yellen said.
Now, Yellen has somewhat changed course, supporting a raise in the reporting threshold from $600 to $10,000.
While still supporting the broad goal of closing the so-called “tax gap,” she relented on key aspects of the program.
“Under the current system, American workers pay virtually all their tax bills while many top earners avoid paying billions in the taxes they owe by exploiting the system,” she said. “At the core of the problem is a discrepancy in the ways types of income are reported to the IRS: opaque income sources frequently avoid scrutiny while wages and federal benefits are typically subject to nearly full compliance.”
“This two-tiered tax system is unfair and deprives the country of resources to fund core priorities.”
However, responding to concerns that the program would target middle class and low-income Americans, Yellen announced several changes to the original measure.
Foremost, the reporting threshold will be raised to $10,000, addressing a key concern from critics who considered $600 to be too low to merit IRS snooping.
Yellen also announced an “exemption” from the measure “for wage earners like teachers and firefighters.” It is not yet clear whether this exemption will extend to other middle class wage earners in the private sector.
Yellen applauded these new proposals for “protecting American workers.”
“Today’s new proposal reflects the Administration’s strong belief that we should zero in on those at the top of the income scale who don’t pay the taxes they owe,” Yellen said.
She concluded, “We will e to work with leaders in Congress to enact this important measure to level the playing field for workers and small businesses, and raise revenue to build our economy back better.”
Republicans have criticized the proposal since it became public.
House Minority Leader Kevin McCarthy (R-Calif.) said, “This surveillance program crosses a line,” calling the program “un-American.”
Senate Minority Leader Mitch McConnell (R-Ky.) said that Democrats “want to finance their spending spree by effectively treating every ordinary American as if they were under IRS audit.”
“I must have forgotten when the president campaigned on giving everybody their own audit,” McConnell quipped.
Sen. Tommy Tuberville (R-Ala.) decried the plan in a statement as “[violating] the liberty of every freedom-loving American who values their financial privacy.”
Winner!
Guilty until proven innocent. And then self-incrimination via your banking records.
-PJ
Now, consider how very little changes with an increase to $10,000 as a reporting minimum! The prior floor would basically mean all accounts get reported. Now? Maybe piggy bank deposits get ignored. Beyond that and the very ill defined 'exemption for wage earners like teachers and firefighters' [NB: Note that 'police' have been replaced by teachers! How very PC!], the reporting at $10k still covers everyone in sight!
Perhaps the Treasury Secretary should show us SPECIFIC EXAMPLES of the tactics of the malefactors she describes; "Under the current system, American workers pay virtually all their tax bills while many top earners avoid paying billions in the taxes they owe by exploiting the system, At the core of the problem is a discrepancy in the ways types of income are reported to the IRS: opaque income sources frequently avoid scrutiny while wages and federal benefits are typically subject to nearly full compliance.”
“Now, Yellen has somewhat changed course, supporting a raise in the reporting threshold from $600 to $10,000.”
Banks have always (as far as I can remember) been required to report deposits and withdrawals of $10,000 or more.
They want a $10,000 reporting threshold for the TOTAL of ALL transactions on an account for a full calendar year, if you pay JUST your rent or mortgage of $833.34 a month from the same account, they want full access to EVERY SINGLE TRANSACTION you made that year.
~~~
You know, if it was about 10 years ago, I might have tacitly agreed with this idea. In fact, I would probably have been surprised they couldn’t already get this information. It’s basically like instant pervasive auditing.
Now, if this was the naive me from 10 years ago, I would have assumed the IRS had purely professional and non-partisan motives, like the other alphabet agencies protecting us from crime and national security threats. In this case, I’d have figured they’d want to know who is laundering money, who is running an illicit business, or even perhaps in human trafficking.
But now, my first inclination is that they want to know who is giving cash to their college kids, or who sold their custom modified guitar online without reporting the income. Drug dealers and illegal laborers be dammned, we want to know which (otherwise) law abiding citizens did with their pocket change
So they will “settle” for 5k or whatever it will be, and folks will think they win…
Government has had every 10k transaction reported to them for decades folks…
When it’s all said and done I guarantee that number will wind up lower…
Fact is government has no business in anyones bank account without a warrant…
But no outrage that they have been for decades..
Frogs in a pan..
Hey, Congress critters.
Be sure you read this bill to find out what’s in it before you pass it this time.
Yes.......connected to drug dealers.......called structuring.
I’m sure she’ll have something else she’ll be Yellen about.
The democrat base is not people who work to make an honest living.
Right! They haven’t given up. They will just use another approach.
We will have a flat tax, flatter than Brandon's dream girlfriend...
Hyperinflation will put everyone in the same tax bracket.
The highest one!
Darn it! Now I hafta deposit that 500K I took out in ca$h!
Yeh. Once someone gets “caught” blowing the 10K limit, forever thereafter they will be subject to the 600$ rule.
The reporting threshold is already $10,000, so they totally backed off.
I think this post is mostly correct, in that one version of the bill says 10K per year, but there are exemptions for deposits of "wages," however they defined that term.
But of course they will snoop at will no matter what the law says.
I take back what I said about ‘the reporting limit already being 10k so they backed off’.
Illegal search = 4th amendment violation.
That is not a tax gap. That is a severe spending problem.
But this is $10K in TOTAL transactions for the year, not individual transactions, correct? That’s still going to flag just about every account.
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