When the White House proposed a new rule giving the IRS access to cash-flow data on any bank account holding more than $600, Treasury secretary Janet Yellen defended the low threshold as a means of ensuring “individuals can’t game the system and have multiple accounts.”
As we pointed out, that argument was ludicrous: “The administration is seriously arguing for a new oversight regime that would gather data on nearly every American on the off chance that a billionaire opens several thousand bank accounts.”
Senate Democrats seem to agree. They have raised the threshold from $600 to $10,000 and added new exemptions for wage deposits and payments under federal programs. That’s all well and good: Spying on almost everyone is slightly less bad than spying on everyone.
Still missing from the revised proposal, though, is a rationale for the new threshold. If $600 was unreasonably low, why is $10,000 the right number? Democrats argue that the higher threshold, coupled with the added exemptions, target the rule at “opaque” streams of income, such as those from partnerships or proprietorships, which accrue largely to the wealthy.
But if it’s the rich they’re after, $10,000 is as arbitrary as $600. A simpler, more effective way of targeting the wealthy might be to target the wealthy, say, by strengthening enforcement or reporting requirements specifically for those earning high amounts of “opaque” income.
That the Democrats haven’t considered such a measure suggests they are either obfuscating the purpose of the new IRS rule or else just want more power in the hands of federal bureaucrats.