Tag: taxes

What does the Biden Administration and the Venezuelan Dictatorship Have in Common?

What does Venezuela’s desire to adopt a totally cashless society and the Biden administration’s plan to require banks to report all transactions over $600 to the IRS have in common?  They are both about establishing government control over our finances and diminishing personal privacy.

The Biden administration believes that requiring banks to report all transactions over $600 to the government would reduce income tax evasion.  However, the IRS can already gather all the financial information it may need for an audit without adding this cumbersome requirement.  If instituted, the compliance costs to report all transactions over $600 will be enormous and the reporting process will be a bureaucratic nightmare.

In addition to the compliance costs, which would drive up the fees charged by banking institutions, the privacy implications are alarming.  The IRS would have access to information about any banking transaction exceeding $600.  If you’re withdrawing a few thousand dollars to purchase a used car, the government will know about it.  If you received a thousand dollars in wedding gifts, the government will know about it (and try to tax it).  If you spend $600 to attend a protest event, the government will know about it.  Even if you move money from one account to another, not only will the government know about it, it would also likely trigger an IRS audit. There is no telling what the government will ultimately do with the information they collect about individual spending, saving, and earning habits.

It is all but certain the reporting of transactions over $600 will be reported electronically.  Not only will the government have unconstrained access to most people’s financial activities, but so will hackers and other nefarious actors.  Considering the increasing number of data breeches against supposedly secure credit card transaction and personal information, it is inevitable that individual financial data will be leaked.  This data provides a treasure trove of information that may be used by criminals.  Under this proposal, not only will bureaucrats in Washington have access to your private information, but so will criminals in China, Russia, and the rest of Eastern Europe. 

This idea seems to always turn up like a bad penny anytime Democrats engage in a federal spending binge.  In 2010, as part of the so-called Affordable Care Act, Democrats wanted small business owners to submit a 1099 form to any vendor with whom they spent $600 or more in a calendar year.  This would have meant, for example, that a company which ordered a few cases of printer paper and pencils from Staples would have to send them a 1099 form at the end of the year.  Companies whose employees stayed at a Sheraton Hotel on a business trip would have had to send Sheraton a 1099 form (for each separate location).  The list goes on and on.

Had a few sane legislators not noticed this insertion into a massive spending bill, and had not small business owners lobbied against this, every small business owner would have been saddled with huge paperwork requirements and thousands of dollars in additional accounting costs.  The costs to comply with the proposed dictates would have dwarfed the small amount of additional taxes collected by the IRS as a result of these requirements.

Democrats seem to have a fixation with the $600 number.  That was their preference in 2010, and it has appeared again this year.  They believe that infringing upon the financial privacy of Americans is a small price to pay in order to fund their vote-buying programs.  They also totally ignore the costs of maintaining compliance, and the fact that such costs will be passed down to all users of banking services.  If inflation wasn’t already bad enough with gasoline prices more than a dollar per gallon expensive than it was a year ago, this bill will surely send inflation spiraling out of control.

What does this have to do with Venezuela?  Ever since the Venezuelans elected a socialist government, which shortly became a dictatorship, inflation has skyrocketed.  Even their currency could not keep up with the rate of inflation.  Before Hugo Chávez became president, the Venezuelan bolivar typically traded at 3 to 4 bolivars to one United States dollar.  Even after several currency reevaluations, it now takes 4,146,022 bolivars to purchase a single U.S. dollar.

Venezuela can not print currency fast enough to keep up with their rate of inflation.  Their largest denomination bank note, 50,000 bolivars, is now only worth a couple of cents in United States currency.  Bank notes are often obsolete even before they enter circulation.  Because of the huge inflation rate, bank notes are rarely used in commerce, and coins have completely disappeared from circulation.

In light of this, Venezuelan dictator Nicolas Maduro has announced plans to abolish physical cash and go to an entirely cashless society.  In a cashless society, all transactions are electronically recorded and available to the government upon request.  This allows the government to track the finances and transactions of specific individuals and to limit the places in which money may be spent.  If, for example, an opposition party is attempting to raise funds to challenge the incumbent government, the dictatorship could prevent any funds from being used for this purpose.  It will be impossible to purchase books, artwork, newspapers, or anything else not approved by the government.  Electronic records of all financial transactions is the secret police force’s best friend.

Will the proposed reporting requirements in the United States be as intrusive as those used by Venezuela?  Not immediately.  However, we must remember the Patriot Act was ostensibly created to thwart international terrorists.  Yet, its use of secret warrants and indictments has been employed more often to prosecute crimes within the United States, rather than foreign terrorists.  The Internal Revenue Service has been used, not only to collect taxes, but to target political organizations opposing the incumbent administration.  And while the FBI has not yet become as much of a political secret police force as Venezuela’s Servicio Bolivariano de Inteligencia Nacional, it has many times exceeded its authority to achieve political aims.  Granting the government another excuse to spy upon its citizens’ economic transactions does not bode well for the future of liberty.

Will those determined to evade United States taxation be thwarted by the bank reporting requirements?  For the most part, no.  Those with large resources will begin conducting transactions using unregulated cyber currencies, tangible metals (silver and gold), and sophisticated barter systems.  They will remove themselves from the United States fiat currency system.  In fact, the bank reporting requirements may result in a reduction to tax collection by driving many economic transactions underground.

The real victims of the proposed reporting requirements will likely be middle-class wage earners and small-business owners.  The government will use the data collected to harass (often innocent) citizens through intrusive audits and civil forfeiture provisions.  Even citizens who innocently moved money from one account to another may find themselves bullied by zealous IRS agents or local police forces hungry for the proceeds of civil forfeiture. 

And all this damage is being done so the Democratic administration can attempt to buy votes by dramatically expanding social and spending programs.  It’s hardly a good bargain.

The Republican Choice for President

I’ve had more than a few people ask me my preference for the Republican primary. Up until this point, I’ve been hesitant to name a preference. I tend to have very strong libertarian leanings, believing that individual rights, as outlined in our Constitution, take precedence over a collectivist, socialist system. Accordingly, my preferred candidate for the GOP nomination was Rand Paul. I also deeply admire the presumptive Libertarian Party nominee, Gov. Gary Johnson, and, depending upon how the campaign plays out, might vote for him in November.

For anyone who has read my blog or any of my Facebook entries, it is obvious that I can’t, and won’t, support either of the two remaining Democratic candidates. We do not need a president dedicated to pandering to every left-wing interest group and who advocates forcing his or her pet social-engineering projects on the population through governmental coercion. Private property is one of the cornerstones of liberty. Both Democratic candidates believe that their personal perception of the “public good” grants them the right to seize private property as they see fit to fund and support any group to which they wish to pander.

That leaves the five remaining candidates seeking the Republican nomination. I urge all voters to carefully read the candidate’s websites and to take some time to review their positions on the issues and their histories.

It is no secret that I consider Donald Trump a danger to both the Republican Party and to the nation. Historically, Trump has backed Democratic candidates and has supported “activist” government programs, like socialized medicine and the use of eminent domain for private projects. He has been very vague on most issues of substance, substituting bravado and insults for nuanced policy positions. He is not afraid of throwing his weight around to bully those with whom his disagrees, and there is no reason to believe that this pattern would change if he became president. He displays an alarming naïveté on foreign affairs, doing all he can to insult and alienate our nation’s neighbors and allies. His whole campaign has been based upon nationalist appeal, the venting of anger without any substantive remedies, and tapping into vague, populist slogans. When cornered on specifics, he has let slip an inclination towards an increase in federal governmental scope and power. The world saw what happened when industrialized nations elected National Socialists in the 1920’s and 1930’s. We don’t need to repeat that history here in the United States.

Ben Carson has arguably developed one of the most comprehensive, detailed, and workable set of policies on today’s issues. His proposal for a national, flat income tax is fantastic for its simplicity, effectiveness, and fairness. I urge everyone to take some time to take a look at his policy positions on his website.

While Dr. Carson is an affable and likeable candidate, I harbor serious doubts about his experience and overall temperament, and believe those to be current impediments to his ability to both win the election and to serve as an effective president. He would be a beneficial addition to anyone’s administration, particularly as Secretary of Health and Human Services, Secretary of Housing and Urban Development, or Surgeon General. I hope that his current campaign is just the start, and not the end, of his commitment to national service.

Either of the remaining three candidates would make fine presidents, and would be vastly preferable to either of the Democratic candidates.

John Kasich has had a solid record, both as a Congressman and as Governor of Ohio. He has confronted many challenges in Ohio, and has handled all of them well. However, he still has a tendency to rely upon governmental programs, when the free-market would be far more effective. With the exception of Trump, Kasich has been most vague about his policy plans once in the White House. He has, rightfully, extolled his record as governor, but has not been very specific as to what he will accomplish as president. I am looking for a more detailed and specific set of plans than what Kasich has already advanced.

Ted Cruz has laid out a fairly detailed set of proposals, and most of them are pretty solid. He is arguably the strongest Constitutionalist of the remaining candidates. He is a fervent believer in the Constitution and in respecting the limitations of federal power. He is the candidate least-likely to pander to specific interest groups in order to solicit political support. His vocal opposition to ethanol subsidies while campaigning in Iowa is a testament to his integrity on the issues and fidelity to his beliefs.

While I would probably have few reservations about voting for Cruz over either Clinton or Sanders, I do find some aspects of his positions and temperament troubling. His corporate tax plan seems to be a value added tax in disguise. I am always reluctant about supporting new ways to tax individuals and businesses, since such taxes always seem to supplement, rather than replace, other forms of taxation.

I also find his positions on immigration and social issues to be a bit too hardline. The government has no more business interfering in people’s private lives than it does their economic affairs. In addition, we have over ten million illegal immigrants in our country. While the United States certainly has a right, and an obligation, to secure our borders, illegal immigration has been tacitly accepted by government, private industry, and individual citizens with a “wink and nod” for generations. A nativist element in the country uses the issue of illegal immigration as a cover to express their deeply held prejudices. The rest of the country has had, in one form or another, no problem in hiring illegals when it was convenient. While I believe the government has no obligation to provide welfare and other governmental benefits to illegal immigrants, I believe that we need a more realistic policy towards them than just “throwing them out of the country.”

Finally, Cruz’s temperament is a potential issue. It is no secret that he is a strident advocate for his views, and this stridency has won him few friends among his Senate colleagues. His campaign has also engaged in very questionable tactics, using dirty-tricks to a far greater extent than any of his rivals. A president needs to work effectively with both members of his own party and with the opposition. Reagan did this masterfully, while failed presidents like Carter and Obama were less adept. We need a president who will be able to work effectively with Congress, while maintaining fidelity to his beliefs. While I have no doubt about the sincerity of Cruz’s beliefs, I do have serious doubts about his ability to work well with other politicians of either party.

Marco Rubio has pretty solid positions on most of the issues. His tax plan, while not a flat tax that I would prefer, is well thought-out and comprehensive. He is a solid Constitutionalist, and would certainly appoint strict constructionists to the Supreme Court. He does have the personality to work effectively with others in government, while maintaining his ideological integrity.

Rubio’s history on the immigration issue is mixed. I believe that the attempts of the so-called “Gang of Eight” were well-intentioned. Their proposals acknowledged the reality that exists, and did not solely pander to either the nativist or social-engineering liberal elements. However, he has supported expansions of the H1-B visa programs, which have had a detrimental impact on some U.S. workers. He has since backed off his previous support of H1-B visas.

Rubio is young, and is not as experienced as I would prefer. But he is far more experienced than our current president, and has demonstrated his leadership skills and ability to work with other politicians. I think he has laid out a solid foreign policy platform and has the ability to be a very successful leader.

While I would have no problem with selecting Kasich or Cruz over either Clinton or Sanders, I think that Marco Rubio would be the most effective president of the current candidates of the two major parties, and will be the most electable of the current Republican candidates.