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The Biden administration is pushing an eerily Orwellian plan that would give the Internal Revenue Service unprecedented power to require banks to report the account transactions of ordinary Americans.ANDREW KELLY/Reuters

Big Brother is alive and thriving in Washington, and many average Americans don’t like how closely he is watching them.

The Biden administration is pushing an eerily Orwellian plan that would give the Internal Revenue Service unprecedented power to require banks to report the account transactions of ordinary Americans. How ordinary? The IRS wants information on every bank account with a balance of US$600 or more, or with more than US$600 worth of transactions in a year.

That means virtually every person who gets a paycheque would be affected. About 160 million working Americans and their families would be under the microscope.

The plan has drawn heavy fire, during congressional committee hearings, from those who fear it would be a breathtaking and unnecessary expansion of government oversight. Currently, the government can access account information on bank transfers over US$10,000, a threshold imposed to allow it to detect drug dealing, money laundering and terrorism. Banks are required to report to the IRS any accounts that generate US$10 or more of interest every year.

U.S. Treasury Secretary Janet Yellen says the proposal is targeted mainly at rich tax evaders who are experts at moving and hiding income. The rationale is part deterrence and part shaming. The feds believe taxpayers will be less likely to lie on their tax filings if they know the government is monitoring their account activity closely. But just in case the honour system doesn’t work, the Democrats have earmarked US$80-billion for the IRS, some of which can be used to hire an army of inspectors to enforce the dragnet.

Opponents of the plan say it is a gross invasion of privacy, a nickel-and-dime effort to fund a proposed US$3.5-trillion spending bill and yet another way for the government to snoop on the everyman.

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In an opinion article published this week in a newspaper in his home state of Kentucky, Senate Republican Leader Mitch McConnell called the plan an “extreme infringement” on personal privacy: “The IRS already knows how much you earn. Now they want to know exactly how you spend it.”

Mr. McConnell said in recent weeks he had heard from thousands of constituents who were “uniformly dismayed that their private financial decisions could be subject to real-time monitoring.”

During a Senate banking, housing and urban development committee hearing last week, Wyoming Republican Senator Cynthia Lummis suggested to Ms. Yellen that the plan is rooted in a lack of trust in the average American worker.

“Do you distrust the American people so much that you need to know when they bought a couch? Or a cow?” Ms. Lummis asked.

Others have weighed in with concerns. A group of state treasurers and auditors told Congress the plan was “one of the largest infringements of data privacy” in U.S. history, and business associations have voiced displeasure at the anticipated impact on small-business owners.

Many so-called ordinary people have objected, too. One small-business owner in New York told me if the plan were implemented she would move more of her business to cash-only transactions. Nobody in their right mind would want to have a bank account, she suggested.

Ms. Yellen, whose own net worth is estimated at US$20-million by Forbes, was unmoved by the pushback. In recent hearings and media interviews, she has characterized the plan as part of “routine” data collection the government conducts with the help of banks. She has pointed to the US$10 interest reporting threshold, which is fed into the tax system to help determine individuals’ taxable income.

She has cited income hiding as a serious issue, and the root cause of a huge tax collection gap in the U.S., and she has said the information gleaned under the new plan would help identify high-income earners who may be contributing to that problem. “These would be helpful indicators of where it would make sense for auditing to occur,” she said in a television interview this week.

Of the many curious aspects of the plan, the US$600 threshold seems particularly arbitrary and inconsistent with the stated focus on rich evaders. How many ordinary people have personal budgets that exceed that amount?

Most concerning is the plan’s apparent lack of respect for a basic tenet of the rule of law in a free society: that a person is innocent until proven guilty. The sweeping scope and power of the plan seems to presume exactly the opposite.

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