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Why The Biden Administration Wants To Track Your Bank Accounts


It hardly strikes any of us as news that the government does not care about our privacy. But recent efforts by the Biden administration to put millions of Americans under the gaze of financial regulators take that disdain for ordinary citizens to a new level.

The Biden administration has proposed to require banks to provide the IRS with data on accounts with total yearly deposits or withdrawals of more than $600. That is to say: if more than six hundred bucks moves in or out of your account in a year in total, the IRS would know about it. This was too much even for Democrats, so now the proposed figure has been increased to $10,000.

When we talk about the right to privacy in America, it’s usually code for abortion. That makes little sense to anyone who hasn’t studied the twisted line of cases that activist judges used to cram infanticide into the Constitution. It also makes it hard to discuss without getting tangled up in culture war fights that really have nothing to do with the right in question.

Real privacy, though, the idea that Louis Brandeis and Samuel Warren famously characterized in their 1890 article in the Harvard Law Review as a subset of “the right to be let alone,” is something Americans care as much about as any other people. The idea of anyone tracking our thoughts, our words, our finances, or our actions infringes on something that might not be spelled out in constitutional text but is nonetheless deeply felt by most people as a natural right.

The idea that people — and governments — should mind their own business is older than the American republic. But privacy, as a concept, is hard to define. Brandeis and Warren tried, but rights as such are slippery, even for two of the era’s leading legal minds.

Part of the problem, too, is that when our Founding Fathers appended a Bill of Rights to the Constitution, it focused the national mind on the idea that our rights were the things listed in that law. This led to two errors: believing that only those enumerated rights were protected, and believing that people only needed to protect their rights from the government.

Pester the Little Guy, Instead of the Big Ones

Transactions involving $10,000 in cash are already supposed to be reported to the government in a currency transaction report (CTR). That is a pretty serious privacy violation that most people don’t care about because, really, how often do you have $10,000 in cash at one time? But the answer may surprise you: millions of CTRs are filed every year, including 16 million of them in 2019.

That number is nothing compared to how many people will be caught up in government databases if the new law Biden has proposed comes into effect. Not only does it expand the $10,000 figure to non-cash transfers, it applies to the yearly total, not just a single transaction. The requirement would also apply to peer-to-peer services like Cash App and Venmo.

The current plan excludes transfers related to wages or benefits, but this is a nonsense position: the IRS already tracks wages and benefits payments, so excluding them from this mandate is meaningless. Enforcement would require hiring thousands of new IRS agents, but most of the burden is placed on banks and credit unions, who will inevitably pass on the cost to consumers. Ultimately, you will have less privacy and you will pay for the effort.

The Biden administration would have us believe this is all part of a plan to catch wealthy tax cheats, and at some level it probably is. But the idea that this will only impact the rich is a bald-faced lie. Jeff Bezos is not being paid in cash, but millions of waiters, bartenders, and handymen are. Most of them may pay their taxes as required, but if the bank account doesn’t look the way the IRS thinks it should, they will have to turn their lives upside-down to prove their innocence.

The whole idea shows that the people running our government do not even spare a thought for the average citizen’s privacy when imposing more burdens on us and the financial institutions we use. The entire nature of the income tax works against privacy, with the government demanding to know where your money comes from and what you do with it in order to assess taxes and grant deductions.

The Eye of Sauron Turns on Bank Accounts

Earlier generations of Americans would have been appalled at this intrusion on our private lives. They lived in a world where the government was funded by tariffs and excises, things which require less precise knowledge of an individual’s habits. The government knew how much whiskey was being distilled and how much sugar was being imported, but they had no idea who the final consumers of these goods were. Everyone agreed: that was none of their business.

The privacy intrusion of the income tax started gradually and eventually became commonplace. Income taxes initially applied to people making $4,000 — the modern-day equivalent of about $125,000 a year. Most people were not affected, so they ignored the privacy implications. Now, all of our wages are intensely monitored, and even that is not enough for the Biden administration. They want to know it all.

Will this information be misused? Yes. The only question is how. When people began to discuss a law of privacy in Warren and Brandeis’ time, the ways in which that right is violated today could scarcely be imagined. Technological advances that have improved life in so many ways also hold the key to increased government surveillance. The Treasury Department of 1921 could never effectively monitor every American’s bank account — but the 2021 version can.

The government has long encouraged people to open bank accounts, and for good reason: they are a safe way to hold funds and ultimately save money over check-cashing places and other non-bank ways of transferring money. But making banks into state informants will force people in the other direction. Any Americans wishing to preserve what little financial privacy remains to them will use cash more, or possibly move assets into cryptocurrency.

Hopefully Congress will put a stop to this attempt at financial panopticon. Meanwhile, businesses that care about privacy should make cash and crypto options easier for customers. If the government is determined to monitor our every move, we must make ourselves impossible to monitor.