The Biden administration is actively pushing Congress to require banks to report to the Internal Revenue Service on the account activity of a huge swath of Americans. This unwarranted snooping would be an invasion of privacy, and lawmakers should make sure it doesn't happen.
Treasury Secretary Janet Yellen and the IRS have asked Congress to mandate banks send along annual inflows and outflows from accounts with at least $600 or $600 worth of transactions. That's a low bar that would expose the majority of bank accounts to additional scrutiny.
The administration claims this would allow the IRS to conduct audits more efficiently.
In reality, it's all about the federal government trying to squeeze Americans for additional tax dollars in an effort to fund Democrats' $3.5 trillion budget wish list. Or as Yellen phrased it in a letter to Congress, the government has "a shortage of necessary funds for key national priorities." Biden officials estimate this could bring in upward of $400 billion over a decade.
This is a sleazy way to go about it, and it offends Fourth Amendment protections against unreasonable search and seizure. Taking all these records and sifting through them for possible audits is an incredible overreach and an unprecedented invasion of the privacy of untold millions of Americans.
It's also none of the federal government's business.
Business and banking groups are pushing back hard, as are some state legislatures.
The Small Business Association of Michigan and the Michigan Bankers Association are among them. The proposal would be cumbersome for financial institutions to implement, and they have raised concerns about how this could put the financial information of consumers at risk.
Rann Paynter, president and CEO of the Michigan Bankers Association, says the plan would hamper both financial institutions and consumers.
"It's certainly a burden to the holders of those accounts, and an invasion of privacy to Americans for that type of information to be shared with the IRS," he says. "It's a lot of information to provide to the government that is not necessary."
Paynter notes that if the IRS is concerned about some individuals or businesses avoiding their share of taxes, the agency already has the tools it needs to investigate.
The pushback has caused House Democrats to put aside the proposal for now — at least in its existing form. They are still considering a version that would impact fewer people.
U.S. Rep. Dan Kildee, D-Mich., has noted the concern over the negative impact this could have on low-income Americans, whom Democrats purport to want to help. Yet Kildee, who is on the Ways and Means Committee, also said the issue isn't "completely gone," according to The Wall Street Journal.
Given the invasiveness of the proposal, it needs to go away. Congress should ignore the demands of the Biden administration and make sure this extraordinary approach to tracking of the bank accounts of average Americans never happens.
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