We all know the Biden administration is proposing a lot of changes to be made in the coming weeks and months. One of those, of course, is to increase taxes for the wealthy, as that has been a main talking point of the political left for years now.
According to them, the top one percent of the American elite get away with far too much, including evading taxes and not reporting millions in income. And they are right to some degree; those that have more than most of us could dream of already need to be paying their fair share each year to help out our economy.
However, what the current administration is proposing doesn’t exactly seem to be much of a solution.
If you haven’t heard already, they want every account that either brings in more than $600 a year or has a balance higher than $600 to have the total deposits and withdrawals reported to the IRS annually, according to The Hill.
Supposedly, the purpose is to catch anyone who might be cheating the US government out of their dues or to find fraudulent and criminal activities, particularly among the rich elites of society.
As Treasury Secretary Janet Yellen explains, “If somebody reports an income of $10,000 and they had $3 million go out of their checking account, that tells the IRS that’s an individual you might audit.” And to be sure, if someone is really spending $3 million a year while only earning $10,000, something fishy is most certainly going on.
However, the government doesn’t seem to understand that more than just the wealthy or criminals have unexplained, inconsistent, and often unreported incomes.
As the Federalist points out, most Americans who make less than $25,000 a year have accounts that look like this, albeit without so many zeros on the end.
Journalist Saager Enjeti explains this on his podcast, “Breaking Points,” by saying, “You know who also happens to have income that isn’t reported and often doesn’t match what’s in their bank account? People who are poor and work in the service industry, or they’re not W-2 workers: handymen, bartenders, servers – some of the most vulnerable people in our economy.”
When a struggling to make ends meet bartender collects their tips at the end of the night, that cash rarely goes into a bank account, and it certainly doesn’t go on their W-2. Instead, it is often immediately used to pay off debts, purchase necessities, or keep a roof over their head for the next few weeks. And if it is put in the bank, it’s only to be added to another meager supply of cash and, then, withdrawn to put food on the table, make a utility payment, or pay for their kids’ school supplies.
This means that what would be seen in a comparison of their inflow and outflow is often far off balance, which may prompt the IRS to look further into their finances. As Enjeti says, this makes it “three times – yes three times – more likely to audit a person making less than $25,000 a year than to audit the income flows of the richest 1 percent of Americans.”
So who’s really getting the short end of the stick here?
Let me tell you; it’s not billionaires like Jeff Bezos, Elon Musk, or Bill Gates, who, should they choose to use them, already have accounting tricks, loopholes, and more to get out of paying their share.
Instead, it’s that single mother of three living down the street who works two jobs just to make ends meet.
Another problem with the plan is that it’s incredibly invasive. Suddenly, you have a federal agency with the legal right to check into every transaction and deposit made into your account.
Of course, Yellen says that won’t happen, that “individual transactions of any individual will not be reported.” You know, just like the FBI, NSA, and CIA have said, there’s no spying going on against Americans.
And we all know how that turned out…