Yes, you read that correctly. One section of the Democrats’ tax proposal would kill community banks. Probably not all of them. But it’s a killer indirect tax. (If you click the link above, scroll down to page 88.)
Here’s the short version. First, the regulation would apply to all accounts (personal and business) holding more than a
de minimis gross flow threshold of $600 or fair market value of $600.
Second, financial institutions must report
data on financial accounts in an information return. The annual return will report gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner.
In other words, just about every entity with a checking account will have the details of their transactions reported to the … well, this is kind of important. The recipient will be the Internal Revenue Service! Yes, the same outfit that once employed Lois Lerner and was weaponized against conservative groups during the Obama administration.
A separate proposal asks for 54,000 new IRS agents. No wonder. But the real burden will fall on banks who must implement this monstrosity. Large banks with programming staff on-site can create these reports at fairly low cost. Small banks will not be able to cover these added costs. Many will merge, sell their business to a larger bank, or just go under.
Full text of this proposal: