AMAC Exclusive – Shane Harris
When Democrats swept both chambers of Congress and the White House in 2020, they vowed to “make the rich pay their fair share.” As they embarked on trillions of dollars in spending and drastically expanded the scope and power of the federal government, they insisted that only “billionaires” and “wealthy corporations” would be shouldered with an added burden. That narrative – which was always a fantasy – has now completely collapsed, as Democrats are weaponizing the IRS and putting the finances of every single American under a microscope to squeeze every last dollar out of middle- and working-class Americans and small businesses.
The charade of “targeting the rich” with tax increases was completely dropped last week as the IRS posted an explainer warning Americans that any payments of $600 or more per year received through apps like Venmo, CashApp, and PayPal must be reported through form 1099-K so that they can be taxed as income. It is important to note that, before this year, the threshold for filing a Form 1099-K report on payment apps was at least 200 transactions totaling an aggregate of at least $20,000. This rule reflected the sensible view that a lower threshold would impose a very costly administrative burden both on the IRS to enforce, and on taxpayers to comply. Many Americans receive payments on payment apps for non-business reasons and they should not have to worry about tracking and justifying every convenient use of an online platform that doesn’t have anything to do with income.
Nonetheless, Democrats lowered the threshold to $600 as part of their 2021 “American Rescue Plan” – a $1.9 trillion bill that was supposedly all about “fighting COVID-19.” While Democrats touted the relatively small amount of money in the bill for COVID mitigation, they also quietly amended certain portions of the Internal Revenue Code to give the federal government unprecedented access to the financial lives of everyday Americans.
The IRS further warned last week that failure to report $600 payments could trigger an audit – which the agency will be more than equipped to handle thanks to 87,000 new IRS agents on the way courtesy of Democrats’ so-called “Inflation Reduction Act.”
Given that billionaires aren’t known for conducting business on Venmo in increments of $600, it’s difficult to see the policy shift as anything other than a strategy to capture every last cent of taxable income from the middle and working classes, even if it means that the resulting cost of IRS enforcement and lowered economic activity could vastly outweigh the amount of money in taxes collected for the Treasury.
Democrat apologists have responded to criticism of the new policy by pointing out that income received through payment apps is indeed taxable, and was so even before the recent change. Thus, they say, Democrats are only targeting “tax cheats,” and Biden has kept his promise of not imposing any “new” taxes on Americans making less than $400,000.
To some extent, this is true. There are indeed likely some Americans who don’t report small amounts of income earned from part-time jobs or side gigs. But that still doesn’t explain away the fact that Democrats sold their policies as going after billionaires and big business and are now turning around and targeting anyone but those individuals. While the IRS will now target small transactions, what are the new “enforcement strategies” to target the wealthy?
Once again, it seems, the rich will enjoy loopholes and back doors while the rest of us will have to fork over more of our hard-earned money both in taxes and to pay for tax advice. To the extent that corporations are forced to pay more taxes, much of those added costs will be passed onto consumers, just as the burden from the inflation caused by these same policies has been. In effect, then, the middle and working classes are bearing the entire cost of Democrats’ spending.
On a more basic level, the new policy is also simply an enormous headache for millions of Americans who just want to use payment apps as a convenient way to transfer money for non-business reasons. The Washington Post, which has spent the better part of two years cheerleading Biden and congressional Democrats for “going after the rich,” is now advising its readers on “what to do if a payment app reports your cash gifts to the IRS,” specifically cautioning that people should “be prepared to prove money you received via PayPal or any other payment app — to split a dinner check or as a cash gift for your wedding — was not business income.”
The fact that such a scenario is something ordinary Americans now have to worry about is as clear a sign as any about what Democrats have planned for those 87,000 new IRS agents. As with every liberal scheme to build a socialist utopia, the nice-sounding headlines have given way to the reality that bigger government and more taxes always, always fail to deliver what is promised and leave ordinary people worse off than they were before.
Shane Harris is a writer and political consultant from Southwest Ohio. You can follow him on Twitter @Shane_Harris_.