The Wall Street Journal reports that the Biden administration wants Congress to enact a policy that would give it access to the bank accounts of the overwhelming majority of Americans.
The measure would allow the Internal Revenue Service (IRS) to review every bank account that has a $600 balance or that has made $600 worth of transactions over the course of a year. In other words, the IRS would get to spy on the bank accounts of just about every American.
The measure is being pushed by Charles Rettig, the commissioner of the IRS, and Janet Yellen, the Secretary of the Treasury.
The House Ways and Means Committee is currently debating whether to include the measure in the $3.5 trillion spending bill that President Joe Biden and the Democrats have been trying to force through Congress.
The ostesible rationale
Yellen, to promote the measure, recently appeared before the House Ways and Means Committee.
There, Yellen claimed that the purpose of the measure is to go after wealthy tax evaders in order to get the federal government more money. The Biden administration is estimating that an additional $463 billion could be brought in over the next ten years as a result of this policy.
When one of the members of the committee pointed out that $600 is quite a low threshold if the purpose is to target wealthy tax evaders, Yellen replied, “that’s correct, but it’s important to have comprehensive information so that individuals can’t game the system and have multiple accounts.”
And, in response to those who argue that the measure would constitute an invasion of privacy, Yellen said:
Banks already report directly to the IRS the interest that they pay on accounts when it exceeds $10, and this is not a proposal to provide detailed transaction-level data by banks to the IRS. It is a proposal to add two additional pieces of easily ascertained information onto the 1099-INT form the banks already file.
Republicans are leading the way in fighting back against the Biden administration’s proposal.
Congressional Republicans have introduced a piece of legislation, the Protecting Financial Privacy Act of 2021, which would “prohibit any Federal agency from requiring financial institutions to report on the financial transactions of their customers.”
Local banks have also been rallying their customers to fight back against the measure.
It is unclear how likely it is that the Biden administration’s proposal here will become a reality. At the moment, the Democrats are clearly trying to keep it out of the spotlight, which suggests that they think it will not be popular with the American people.