Biden's Plan To Crack Down on Tax Cheating: Snooping on Everyone's Bank Accounts
The president says the IRS needs just two bits of information: all the money that goes into your bank account, and all the money that comes out.
In order to make sure the rich are paying their fair share in taxes, President Joe Biden says the IRS just needs two bits of information: all the money that goes into your bank account, and all the money that comes out.
That's how Biden pitched his plan for a more comprehensive financial surveillance state—all to catch those nasty tax-cheating rich folks, of course—during a speech from the White House on Thursday afternoon.
The plan "will give the IRS the resources it needs to keep up with the lawyers and accountants of the super-wealthy. It would ask just for two pieces of information from the banks of these folks: the amounts that come into their bank accounts and what amounts go out of their bank accounts," Biden said. Right now, he added, "the IRS can't see what they're making, and can't tell that they're cheating."
Thankfully, he stopped short of using the "If you've got nothing to hide…" cliché.
Still, Biden's framing of this plan to beef up IRS enforcement with an additional $80 billion in funding is wildly off-kilter. As I wrote in April, giving the IRS more information about the inflow and outflow of bank accounts won't automatically tell the IRS that someone is hiding unreported, taxable income. But it gives the federal tax cops another way to establish probable cause for a financial stop-and-frisk.
The details of Biden's plan are far different from the innocuous-sounding description he used Thursday.
"The administration's proposed 'comprehensive financial account reporting regime' would dramatically increase the types of financial institutions and transactions exposed to the feds' prying eyes," Reason's Matt Welch recently wrote. "The new domestic surveillance program, which requires congressional approval, is one prong of a tripartite strategy for transforming the entire global financial system into a harmonious, haven-free collection funnel to the IRS."
Closing the so-called "tax gap" and making sure everyone pays what they owe is a crucial part of how Biden and congressional Democrats plan to pay for part of the budget-busting $3.5 trillion reconciliation bill curring being crafted by the House. The $700 billion that will supposedly come from stepped-up tax enforcement was the largest single funding source for Biden's American Families Plan when he outlined it earlier this year (though Congress could make significant changes before the bill is finalized).
It is disingenuous to suggest, as Biden did Thursday, that letting the IRS peep at your bank records is about ensuring "that the wealthy can no longer hide what they're making, and they can finally pay the fair share of what they owe."
As the details of his proposal make clear, enhanced tax enforcement will mean hoovering up more data from crypto wallets, bank accounts, and third-party payment providers such as PayPal and Venmo. And that comes after Biden already ordered the IRS to give greater scrutiny to transactions in the so-called sharing economy.
Biden is pitching this plan as a way to go after the wealthy people who can afford tax lawyers and accountants. But as always, the people who can't afford those things will probably bear the brunt of the new rules.
"I'm not out to punish anyone. I'm a capitalist," Biden said Thursday. "All I'm asking is that you pay your fair share."
All he's really asking is the end of financial privacy for millions of Americans.