No one wants to talk about the underground economy. But we should. Published by Jane the Actuary View all posts by Jane the Actuary
35 thoughts on “Forbes post, “Here’s Why, Actually, The IRS $600 Bank Reporting Proposal Is Entirely Reasonable”
You are an insane big government statist if you do not see this as a complete intrusion into your life more than any free citizen should be subjected to.
THE IRONY HERE (in response to a comment about the author being for big government) is that it’s exactly the opposite of what it looks. And this is Whats scary. (I guess FIRST LET ME SAY though, that THIS ARTICLE MADE ME MAD & that I don’t appreciate the authors nerve.) (I almost hope she did it on purpose to rile up the public opposition it needs. Wishful thinking.) BUT I think we have a serious PROBLEM here with people thinking it’s a bigger government that’s the problem. Because that means that the real problem.. is getting exactly what they intended to get…. THINK ABOUT IT. The more anti-government that we become… the more power the rich gets. And it’s already in effect & it’s the actual core problem. OUR GOVERNMENT is WEAK. BECAUSE THEY’RE POOR. Because the rich has all the money. And the richer the rich gets / the poorer our government gets.. & the poorer our government gets / the more WE get taxed….. its NOT A BIG GOVERNMENT THATS THE PROBLEM… it’s about BIG WEALTHY THATS THE PROBLEM. Wake up. The Government has laws on them that make them ACCOUNTABLE to Us. Does the RICH? … NO. So WHY DO YOU THINK it’s big government that’s the problem – when if it’s the government that has the money – it’s their job to redistribute the money back into the economy to make for a functioning NATION. If they RICH has the money…. It’s staying with THEM. The RICH don’t have ANY written OBLIGATION to fund ANYTHING (pfft. Not even their own taxes) But the RICH doesn’t even have the OBLIGATION to fund SCHOOLS, the rich don’t have any obligation to fund PROGRAMS or BANKRUPTCY or SOCIAL SECURITY or GRANTS or… THE RICH DOESN’T have any OBLIGATION NOR ACCOUNTABILITY to PROTECT YOU or serve the RIGHTS or need or JUSTICES of any of us. The RICH ALSO DOESN’T have a treasury dept or judicial branch or any agencies that specialize or get paid to focus on each area of ANY of these things to help ANY one at any time. They have nooooo obligation to redistribute ANY of the money they hold to ANYONE but THEMSELVES. They don’t have a SYSTEM to take on that type of responsibility – nor are they ACCOUNTABLE to do so.
SO THE IRONY in the comment about blaming this author for being ‘Big Government’ (besides it being irrelevant) is that the REASON we’re seeing these nickel & dime taxes…. Is because our government has become SO “SMALL” (aka: Poor, Weak, NOT powerful, insufficient…. small) that it CAN NO LONGER FULLY GOVERN.. ITS WEALTHY… if anything our weak/poor/small Government is needing to Borrow from & turn to HELP from its very own wealthy… WHICH IN TURN, IS EXACTLY WHY THIS MAGNIFYING GLASS OF TAX MONITORING IS BEING IMPOSED ON THE “POOR” (us)… BECAUSE OUR GOVERNMENT IS NO LONGER “BIG” ENOUGH… TO IMPOSE LAWS & REGULATIONS on the ones now BIGGER than it.
So next time you say we need a “Smaller government” … think twice about what you’re saying – because you just might be digging your own grave.
P.S. Why is no one talking about the “BILLIONAIRE TAX PROPOSAL” ??? The “billionaire tax proposal” of which was going to tax all billionaire corporations 15% AND finally tax the top 700 of the 1%’s WEALTHIEST elite… putting BILLIONS of dollars back into the hands of our government – so it could CIRCULATE AGAIN.. rather than accumulate only in the hands of the RICH. The “Billionaire Tax Proposal. Why is nobody talking about it? Why is Joe Manchin a “hero” when the Billionaire Tax Proposal is the main thing he just worked to get thrown out.
I guess the news forgot to include the billionaire tax proposal when it was telling you the “build back better plan” was horrible without ever going over what’s actually on it.
Why is no one talking about the Billionaire Tax Proposal that got thrown out immediately just recently (thanks Joe Manchin) only to have the $600 monitoring of the poor stick & be put in effect? Ask yourselves about that.
And when you’re done asking yourselves that, Ask yourselves why if WE’RE being monitored with a microscope the second we earn a measly SIX HUNDRED DOLLARS…. Why isn’t JOE MANCHINS finances being closely monitored after just helping the extreme wealthy avoid paying triple billions in taxes.
I wonder what Joe Manchins bank account is looking like right now.
I think I should maybe have posted this in the main comments now that I think about it. I guess your comment really just inspired me Larry B. I’ll repost it in main comments.
Wow, amazing and insightful comment, ty for posting this
Your Ivory tower is so bright it’s hard to look at. As someone who has three jobs just to afford to live in a big California city, I feel like your take is so out of touch with reality it makes my head spin. You can’t actually believe that people working under the table are going to be better off losing 30% of their already meager income. This will literally put people on the streets. Second, no government outreach programs make it any better, they simply drive people right to the edge of the welfare cliff, where someone has to stay on government benefits indefinitely or find a job that pays double. Maybe if you actually talked to poor and struggling people instead of just speculating from your home office in your 5 bed 2 1/2 bath McMansion you might just change your tune.
I am going to go down to the bank and withdraw $600, then tomorrow redeposit it. The following day I will withdraw it again, just to redeposit it the day after. I’m going to do my part to clog the system.
Big Brother says it is to clamp down on the wealthy, which to the liberals means anybody with a job.
$600 to the “one percenters” is a happy meal. This is not aimed at them.
Whether you take it with a gun or a government, YOU’RE STILL A THIEF
So true ,just to cover health insurance for a family of 3 (single mom) is more than my rent . I technically make more money by making less money ,with what all the programs are worth. It’s a shitty place to be stuck and almost impossible to get out of. So discouraging ,have been working as hard as I can for years and as soon as I make a little bit more money all of my medi-cal and food assistance stop and I’m forced to spend my little bit of Savings on those 2 things until I’m back in the government office getting back on aid. I’m 40 and I’m tired and just about to stop even trying to get out of this situation,and now they want to tax any little bit I make on the side hustling w.e I have to hustle to live in la? This change is bs and the people affected by it is literally everyone making under 1000 a year . Kinda retarded cause you don’t even have to file your taxes unless your making more than 10,000
Exactly. You & I are on the same page. Thank
You for responding to my above comment – &
Thank you for being someone who THINKS & questions what’s going on. We need more people like this.
I agree that the target of this proposal is the underground economy. But having had a nanny, and having paid ALL of the 14% because my nanny really couldn’t afford her 7%, I think it’s really difficult to expect the self employed to be taking such a big chunk out of their wages. And I also think that the administration is disingenuous to think we won’t see what they are trying to do…
I think if you are trying to make the “underground” economy pay their fair share than the politicians should pay their fair share too. Please talk to the people whose hours were cut during the pandemic and were told they need to make less than 200 a week to qualify for unemployment for a family of four. Meanwhile people get government money in the form of upwards of 20 grand. That secondary income can pay for food.
“taxes aren’t somehow optional”
Uhhhh yes they are, that is the entire focus of the last election. The rich get special rules to avoid paying a single dollar in taxes while anyone who makes $600 has to give 3 slices of the pie to Joe. It’s backwards.
This is what happens to a person who just studies the statistical part of everyday human life. I won’t attack you with a human vs machine syory, instead I will say to you.stay where u feel comfortable at. Talking about this over reach is not your best story. You come across as a cold person.
I have had 5 businesses so far in my life and have felt the so called self employment tax very regressive having to pay out 15% of your first year salary can be very hard on a fledgling business with in most cases show no profit. I think there should be a tier approach based on income. That being said I know people who are part of the underground economy who have reached retirement age and didn’t know they wouldn’t be eligible for social security. SS requires having to pay in which they didn’t. My tax guy thinks this $600. reporting proposal will blow up the IRS’s computers.
This is the thinking of a typical pro government person. If it was up to her the government would control every part of our daily life’s. She can find rationale for any government mandate to control more of our life’s to be good for this country. It’s rediculas to think the government has any reason to monitor our bank accounts for any reason. There are plenty of country’s she can live in if she wants the government to monitor her money and everything else in her life. Please feel free to go.
This is a pretty bad take. You start by implying that the criticism of the plan may not be warranted, admit that the criticism is because of the $600 limit (and so not about high earners), then go on to justify it by saying low earners aren’t being tracked.
I have no interest in justifying deceit. But, if you’re going to write an “actually…” story, maybe be consistent, or, better yet, maybe write about all the better ways there are to make the necessary parts of government solvent than an income tax.
Incredibly self-destructive Democratic policy position worthy of a Darwin Award. Dems aren’t targeting the Top 1% – they are targeting the very people who they complained could not qualify for PPP Loans because they did not have legit. banking relationships. Expect a significant percentage of marginalized persons in the underground cash economy (= sub/urban + soon to be former-Democratic voters) to avoid compliance by simply hoarding cash in pillow-cases, the value of which will continue to be devoured by inflation and/or stolen by untrustworthy relatives & roommates.
We do not need more government control. We do not want our financial institutions burdened with another paper mill. Cryptocurrency will win sooner!
In the case of a nanny- If I hire a nanny, he/she/they are providing a service. I do not become an “employer” and have to create a corporation, TIN, etc. just to hire someone to watch my kids. That is solely on the back of the nanny, who is 100% self-employed, and required to report earning and have payroll, FICA, etc. withheld or paid into the government. I don’t “employ” my lawn maintenance or pool person, so why should I be required to “employ” my nanny? Employers are business to make profits and none of the aformentioned jobs qualify as employment but solely services.
The IRS rule of tracking transactions of $600 or more is only going to hurt low-income people because it will prevent them from opening bank accounts. They will be worried about losing their benefits if they have any inflows or outflows above this amount. This will in turn prevent them from getting financing for cars, homes, personal loans, etc.
It is time to ABOLISH the IRS! Time for the Treasury and Congress to do their job and TAKE OVER ALL OPERATIONS OF THE FEDERAL RESERVE! Why is an outside corporation in charge of OUR money! Imagine if we the people could borrow money and pay reasonable interest instead of 100% or more making billions for the banks and the Fed! Our government needs to stop spending OUR money! Billions in debt! The Democrats are using the Covid to steal everything from the people!
Janet your commentary is right on, but I have to admit $600.00 is so minuscule that the taxation on it may not be worth all the trouble to the banks because they would probably have to higher additional personal just to keep the Accounting nightmare it would create. Here’s another take while this money is not taxed to the receiver it has already been taxed by the giver and in many cases the receiver is so poor to begin with that this creates a gap need to other income that they are probably already reporting. You of all people must know the need of a college student having a babysitter job just to try and get a little income while in college just to help with some basic needs, you need to put yourself in this persons shoes they may or may not already have another job that reports the income so this becomes a little more income that really just goes back into system to be spent to make the wheel go round sort of speak and they are probably going to pay some form of tax when it is spent anyway.
What a complete load of garage. It’s a complete invasion of privacy, hurts the poor and is a complete waste of bank and government time and money. Journalists really contribute nothing to society at this point and are just a puppet of whatever the government likes them to say.
Do you have any idea how impossible it would be to find the manpower to process all of these transactions, audits for authenticity and addressing greivances, building the infrastructure for every bank in America to give the IRS this access etc.? Billions of dollars just to make sure babysitters and Bob the Builder pay their meager taxes
IRS says gift of under $12000 no tax if it’s a gift. Well let’s all you does side work do it as a gift and get a gift of money in exchange of the service
How many politicians have been slipped $10,000 dollars and up under the table and not pay taxes. Look a Hunter Biden getting cash under the table from Russia and probably never paid taxes.
I don’t think the IRS has any business handling or being given any more information about my bank accounts then they al ready have due to their obviously unethical behavior I’ve the past 5 to 10 years. Matter of fact I may just go get an offshore account to make sure they can’t. Wonder which country Nancy Pelosi uses.
Here is why this is entirely unreasonable:
-Higher tax for lower income earners
-Greater income gap between rich and poor
-Wealthy people have offshore havens, poor people cannot and are being targeted
Guessing you never participated in gig economy or side work, what a pretentious article that does a disservice to the other side.
I am reading many of these comments and they are coming from an emotional place. Regardless of the reason or the why or the impact, income is supposed to be reported, all income regardless if you are poor, rich, homeless, have kids, in school, doesn’t matter, that is the point. However, some also make good points that businesses are the ones who are going to have to build this out and enforce it, that costs money which means more regulations keeping smaller players out of the financial industry and the fact that the rich have resources to hide their money but it still comes down to, if you aren’t reporting your income, you are in the wrong…..
The justification of intruding on all people’s liberty is somehow justified by the argument the government must collect unreported income from the underground economy is callous. Think about what is being said, we are going to intrude on 90% of the people to catch the 10% who don’t pay taxes. In other words, we are going to take liberty from all people to compel a small minority of people to pay taxes. That is uncollected taxes have a higher intrinsic value than liberty. Which flys in the face of “Life, Liberty and the Pursuit of Happiness.”
Moreover, the additional argument being made is the government is doing this to protect you from yourself. Who cares. I don’t. If you want to work for cash for your lifetime and then discover you have no SSN benefits. That’s on you. Not me. And besides, although the dollar amount cited is not chump change, it is spread out to the point that what is gained will not justify what is taken. Maybe the better approach is education and making it easier to actually come out from the shadows. Instead of these KGB-like tactics.
Aside from this, both arguments fail to show how reporting in/outflows from individual bank accounts will catch a) billionaire tax cheats or b) participants in the off-book income racket. Unless the long-term plan is for banks to start demanding transaction history (who and where the money is coming from and going to), which would be terrifying. Take the nanny example, this reporting system would require AI to make some assumptions based on an algorithm. Say a repeated payment from person A to B. Over the course of the year, person B deposits this in their account but does not report it as income. This, however, according to the AI, is income. Both person A and B are guilty of something. Both will have to go to court to prove it is not income. Instead of the government proving that it is – which is the premise of our judicial system BTW. The government must prove its case. Not the other way around.
Of course, I believe Jane and others feel any payment from one person to another person is in fact income and must be reported to the government. Period. There is no other way to explain why one person would give cash to another person unless they are paying them for goods or services received and therefore is income. Which is sad to me.
It’s all BS, my wife worked hard her entire life, leaving a corporate job to have children. When she went back to work she used her undergraduate degree to teach. When she retired we found about WEP, in which the government steals half of your retirement that she PAID into. She now works at 67 to help us survive. The $600 reporting will not effect us much, we do pay an elderly person to watch her 90 year old mother 1 day a week. If she needs to get paid more because of the tax implications, I guess Grandma will have no one to keep her company the one day a week. I go to dialysis and we do not like to leave her home alone. Yes tax the retired people more, catch every dollar. I hit $750 on eBay this year, another form for tax time, no tax will be do, just more paperwork in my stressed out life. Maybe the IRS should tax millionaires before worrying about the little guy who make less than $15 an hour.
Maybe stop giving away tax dollars to the rich, instead of trying to keep squeezing the poor for more. Read NPR ” Did Emergency PPP Loans Work? Nearly $800 Billion Later, We Still Don’t Know”. Stop trying to manipulate the economy, the scam goes on, and the middle class are thlower. Politicians try to fix things, maybe reduce their outrageous salaries and expense accounts, and tax the rich (people making over 1 million a year). Trickle down economics never worked, never will, the rich never part with their money, they just want more, and more.
Eat a bullet stupid bitch
This is one of the worse articles I have ever read. How the heck did this become a Forbes post? The content the author is trying to push is absolute nonsense.
Jane, are you going to eat crow and fess up that you were wrong about this?
Why am I paying taxes on $600 gross “income” from the sale of old items that cost me money, or crafts that cost more time to make than is possible to charge for? You’re a finance professional, but let me hammer home the key word since it didn’t get through—GROSS GROSS GROSS!
The most frustrating part about trying to get information on what to do at tax time and finding nothing but articles like Jane’s, waxing poetic about the wonders of Biden’s tax plan and the “evils” of traditional organizations like the Heritage Foundation. It’s amazing to read these articles that make claims that Republicans “lied” to us and come to find out YOU lied Jane, you lied.
The media really is in the Democrat’s pocket and it’s so disheartening to read from educated people like Jane who could use their knowledge to help others but instead worked overtime to lead us all astray.
So I decide to sell some of my old stuff on eBay and get a couple thousand dollars for it. It was purchased over 30 years ago and the receipts are long gone – how am I supposed to prove that I’m selling it for 1/5 of what I paid for it? No, sorry, the new rule is not reasonable AT ALL!!! What if I am selling some of it for a relative and give them cash? This is a money-grab to try and justify the ridiculous increase in government expenditures without having to pass a tax increase. It needs to be fixed, though I’m not holding my breath for the idiots in the twin cancers that have a duopoly on our system to actually do anything.