RALEIGH — State Treasurer Dale Folwell is unimpressed with a change to the proposed legislation by congressional Democrats that would surveil U.S. citizen bank account deposits.
The original proposal would grant the IRS the power to require banking and credit union institutions to annually report on accounts and withdrawals at the $600 level. After backlash from financial institutions, the U.S. Chamber of Commerce, as well as state treasurers and auditors, the Democrats are backtracking by raising the requirement to $10,000 in annual deposits or withdrawals.
“Today’s new proposal reflects the administration’s strong belief that we should zero in on those at the top of the income scale who don’t pay the taxes they owe, while protecting American workers by setting the bank-account threshold at $10,000 and providing an exemption for wage earners like teachers and firefighters,” U.S. Treasury Secretary Janet Yellen said in a statement.
U.S. Senate Republicans are not impressed with the overhaul, which they say is still far too invasive. Idaho Sen. Mike Crapo illustrated those concerns by tweeting, “The average American runs $61,000 through their account. The average American will be picked up by this plan.”
Folwell agrees, saying, “the increase to $10,000 does little to change my concerns about this legislation.”
“This is a cumulative number, meaning any bank account with $10,000 of activity, in total, would have to be reported by the financial institution to the IRS. The average American has over $50,000 in activity every year,” Folwell said. “This would still have a chilling effect on those who are ‘unbanked’ and ‘underbanked’ in America.”
Folwell was asked earlier in October about the sweeping IRS surveillance and he expressed concern that it was an invasion of privacy of the average citizen.
The treasurer signed onto a coalition letter opposing the move, which was sent to U.S. House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy on Sept. 17.
“While the stated goal of this vast data collection is to uncover tax dodging by the wealthy, this proposal is not remotely targeted to that purpose or that population. In addition to the significant privacy concerns, it would create tremendous liability for all affected parties by requiring the collection of financial information for nearly every American without proper explanation of how the IRS will store, protect, and use this enormous trove of personal financial information,” the coalition letter reads.
Folwell mentioned another letter sent to President Joe Biden and Secretary Yellen that opposes the surveillance of bank accounts by the IRS. The letter is signed by 23 other state treasurers, auditors and financial officers. The move to allow the IRS to monitor private and public bank accounts was first brought to light May 2021 and is a part of the Biden Administration’s heavily debated $3.5 trillion spending plan.
“I believe that everyone should pay their fair share of taxes,” Folwell said in a statement on the matter. “However, this proposal is an unprecedented invasion of privacy that could actually increase the problem of the ‘unbanked’ and ‘underbanked’ in America.”
Folwell highlighted that a reported 25% of all U.S. households are either unbanked or underbanked.
As chairman of the State Banking Commission, Folwell is concerned that compliance with the IRS’ surveillance regulations will be too cumbersome and expensive for small community banks serving rural North Carolina communities.