This weekend, Binyamin Appelbaum argued in the New York Times that Republicans, in opposing the Democrats’ proposal to monitor bank accounts with certain minimum transactions, are abetting tax evasion.
The IRS, he notes, has recently estimated that nearly half of all income not reported independently on W-2 or 1099 forms goes unreported. Therefore, give the government access to your banking habits, or else you’re a criminal. In logic, this is known as the “false choice” fallacy, and it is one of several that he commits in this piece.
Appelbaum writes:
Republicans have hacked away at funding for the Internal Revenue Service over the past decade, enfeebling the agency. When the rich and powerful open loopholes in the tax code, Republicans reliably fight to keep the loopholes open. Indeed, they valorize Americans who find ways to pay less, a normalization of antisocial behavior that may be even more damaging than the efforts at bureaucratic sabotage.
The worst part comes later, with the ugly insinuation that advocacy for limited taxation is just a form of cloaked racism — ridiculous, but par for the course nowadays, I guess.
Whatever he thinks of limited government and low-tax ideas, Appelbaum cannot be unfamiliar with the distinction between avoiding paying more in taxes than the law requires and deliberately paying less than it prescribes. Yet he positively embraces the fallacy of equivocation in treating as identical two ideas that are not only different but sometimes even conflicting: on the one hand, the idea that our lives do not exist in order to fund the government; on the other, that even crime can be justified somehow if it deprives the government of funds.
First, as to his commentary about loopholes, he blames the wrong party. Republicans do advocate lower taxes, yes, but that’s not the same thing. The Trump tax bill of 2017, for example, imposed lower tax rates but with fewer loopholes. That has been the Right’s model for tax reform going back at least to Jack Kemp. Chuck Schumer, in attempting to restore loopholes such as the full SALT deduction, is helping prove the point.
And no, advocacy for limited government is not based on what racial group is getting government help — it is based on the idea that government should be limited.
But back to the point: Democrats’ original proposal called for monitoring all bank accounts with $600 in annual transactions — a fact that Appelbaum doesn’t even bother to mention. Yet this fact shapes the entire debate over the policy’s goals. This proposal has nothing to do with the wealthy. This would have literally ensnared everyone with a bank account, even many children. Most people’s utility bills are larger than $600 per year. This wasn’t just stupid, it was indefensible.
And yes, so is the current version, even though it raises the threshold to $10,000 per year. That number, which comes to $833.33 per month, doesn’t include paychecks or welfare benefits deposited into accounts, but it does include withdrawals as well as deposits. So it would allow the government to monitor the account of basically every family in America that pays rents or mortgages and utilities — basically, everyone outside the homeless and the otherwise unbanked.
Again, if Democrats’ intention were really just to go after wealthy tax cheats, they would surely be looking at accounts with well over $100,000 in annual transactions, not every single person who pays rent in America. Also, who believes that sophisticated tax cheats are so naive as to deposit their unreported income into American banks?
This bank-monitoring provision was never a good faith proposal. In practice, it would be used to bully people. We know this because we all just saw it happen this summer.
I believe that malicious IRS bureaucrats are happy to leak information about private taxpayers, even if it means committing a felony, and I believe it because they probably just did it. The more charitable interpretation, that taxpayer information reached ProPublica because the IRS is totally incompetent at maintaining data privacy, is no more reassuring, but the agency doesn’t even deserve that much benefit of the doubt given recent malfeasance by bureaucrats such as Lois Lerner.
If this bank provision goes through, we will start seeing leaks to the media about tax policy critics of the Biden administration (or the future Warren or Buttigieg or Stacey Abrams administrations) about how much money they moved through their bank accounts in a given year. As with the ProPublica reports, which absurdly and ignorantly tried to compare taxes paid to wealth rather than income, the public will be misled into believing that these data actually mean something.
One way or another, this information, like the other tax data the IRS handle, will find its way to the media whenever it is useful. It will be used to bully and embarrass people. And it won’t catch any tax cheats.
This is not a conspiracy theory or a slippery slope argument — it is merely a prediction that what has already happened will happen again in the future. IRS behavior is, at this point, one of the strongest arguments for abolishing the income tax in favor of a national retail sales tax or (at the risk of giving conservative readers hives) maybe even a VAT.
Tax reform is a much better idea than this bad faith proposal for government monitoring of nearly all bank accounts. No, the preservation of big government is not worth such intrusions.
