Biden’s Orwellian Tax Surveillance Policy

It’s political suicide for the Democrats, and a dark sign for America.

AccessTimeIconOct 13, 2021 at 4:12 p.m. UTC
Updated Oct 19, 2021 at 8:57 p.m. UTC
AccessTimeIconOct 13, 2021 at 4:12 p.m. UTCUpdated Oct 19, 2021 at 8:57 p.m. UTC
AccessTimeIconOct 13, 2021 at 4:12 p.m. UTCUpdated Oct 19, 2021 at 8:57 p.m. UTC
Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

David Z. Morris is CoinDesk's Chief Insights Columnist. He holds Bitcoin, Ethereum, and small amounts of other crypto assets.

Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

We are witnessing a real-time demonstration of the way a failing political order can lead to the imposition of Orwellian surveillance out of last-gasp desperation. That’s the only honest way to assess the Biden administration’s almost unspeakably bad proposal to require that all U.S. banks report data to the Internal Revenue Service about any account with more than $600 in annual deposits and withdrawals.

This article is excerpted from The Node, CoinDesk’s daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.

The rules do not include individual transaction reporting, but would require reporting total annual inflows and outflows for the vast majority of accounts in the U.S. The only comparable power grab in living memory was the secret surveillance of U.S. citizens’ communications by the National Security Agency. It should be deeply embarrassing to all Americans that our lawmakers are even considering imposing this new financial surveillance apparatus. As another nauseating index of political dysfunction, this rule isn’t even being considered on its own merits. Instead, much like recent half-cocked crypto reporting rules, it’s being crammed through as a pay-for in the big infrastructure bill, practically guaranteeing that it would be drafted hastily and with minimal debate.

It’s utter madness, not just as policy but as politics for Biden’s fellow Democrats. The party already has a reputation as proponents of the nanny state, and here they are lobbying for more surveillance at a moment when Americans are so deeply distrustful of government that they’re going to their literal deathbeds refusing to take a safe, effective vaccine against a deadly virus. The $600 threshold seems particularly suicidal for the Dems, making absolutely explicit that they want to spy on the little guy, too. It’s practically the perfect formula for alienating working people who might otherwise support the kind of helpful policies the infrastructure bill offers.

Republicans, it must be said, are also deeply culpable in this travesty, though they have, as usual, outmaneuvered and outsmarted the blundering, out-of-touch Dems into taking the brunt of the anger. It was the Republicans, remember, who rejected a provision in an earlier version of the bill that would have increased the enforcement budget of the IRS. That would have made it easier for the agency to investigate the high-end tax cheats who really matter. According to the Congressional Budget Office, it would have returned roughly $2.50 for every dollar of the increased IRS budget, without sweeping new surveillance powers.

On its face, then, increasing IRS enforcement was the right thing to do for America. It would have given investigators the resources to dig into specific suspicious individuals and activities, as opposed to the mass data gathering being proposed as an alternative now. But the Republicans decided their anti-tax stance meant not just supporting lower tax rates but also making it easier for their richest donors to evade taxes entirely.

And so, thanks to this brew of different flavors of bad faith, we wind up with surveillance instead of enforcement. This rule should, of course, be opposed on principle – but it’s just one index of a much deeper, scarier downward spiral as social distrust and legislative haste grease the skids for the erosion of the privacy guaranteed by the Constitution. It will take a major change to escape that trap.


Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

David Z. Morris is CoinDesk's Chief Insights Columnist. He holds Bitcoin, Ethereum, and small amounts of other crypto assets.