Concerns from the Independent Community Bankers Association regarding potential tax changes by the Biden administration are drawing interest. The specific provision would change reporting rules to the IRS in that transactions over $600 must be reported, down from the current $10,000.
U.S. Representative Ron Kind explains; “I get what the administration is trying to get at with that. There’s a lot of unreported income, and therefore, tax compliance is a major problem. In fact, the Congressional Budget Office estimates could be as much as a trillion dollars of shortfall, with tax compliance. This isn’t new taxes, this is just what people already owe. But I have a feeling that’s going to get worked out, certainly not at that lower level, but we do need to address some of the tax compliance shortfalls that exists in the system.”
Kind, who sits on the House Ways and Means Committee, says he’s “all for” tax simplification. “The tax code is just riddled with special interest loopholes and appreciation and expensing schedules that the average family back home, can’t take advantage of. That’s why I think you’d have such disparity when it comes to tax rates. 55 of the largest fortune 500 companies in this country are paying zero in corporate income tax, in fact getting tax refunds, because of all the deductions and allowances that they’re allowed to take. And then the wealthiest one percent paying a lower effective tax rate than virtually all working families in this country. People see that and they see it’s not fair, and they’re right, we need to correct a lot of that.”
Kind says paychecks, milk checks, and others, are already being reported, and this proposal is about income “under the table.” “There’s just a lot of other outside income, under the table income, that isn’t being reported, and you could create a whole underground economy if you don’t have a means of reporting some of that stuff. And then you have bartering and you have black markets and you have criminal activity and we don’t want to turn into a third world nation here. And one of the reasons we are a superpower is because we have a relatively compliant tax system, with some major loopholes that need to be closed or we’re going to run into problems in the future.”