In an effort to collect more tax revenues, the Democrats are cracking down on people who have side jobs such as delivering food, driving for Uber, or selling stuff on eBay. I can’t help but wonder what effect this new rule will have on people’s motivation to work.
I received an email from eBay asking me to send an email to my representatives about eliminating the $600 reporting requirement that was included in Biden’s Rescue Plan. Here are the details. The new law would require third party payment companies such as Venmo to report any payments of goods and services over $600, regardless of the number of transactions, (but not Zelle because it works between banks) . I started wondering who came up with that idea. Looks like it was Obama.
A similar change in reporting requirements had been bundled with the Affordable Care Act, but was later repealed. The Obama administration needed money for his ACA, and wanted to make sure small businesses were reporting all of their income, so the change would have required businesses to report when they bought something. Businesses complained that it was too much paperwork. But then payment apps were invented.
Implementation of the new tax reporting was delayed until the 2023 tax returns. The new requirements mean that if you sell one item on eBay for $600 or many smaller items, eBay must report it to the IRS and you will receive a 1099-K .
Of course the real reason they’re doing this is to be able to be able to tax every penny made. Not everyone thinks this is a good idea.
“The IRS spent much of last year trying to get access to more information about taxpayers’ bank accounts,” said Sen. Cynthia Lummis, Wyoming Republican. “Now they are forcing PayPal and Venmo to put even more burdens on small businesses who use these platforms as a cost-effective way of doing business.”
Americans for Tax Reform are also fighting to repeal the provision. They say that Democrats worried about elections got a delay for the new requirements, but they did not repeal them.
“Now, as these new requirements have taken effect, workers are starting to notice the newly imposed burden. With the midterm elections coming up in the fall, some vulnerable Congressional Democrats want to raise the reporting threshold. Representatives Chris Pappas (D-N.H.) and Cindy Axne (D-Iowa) have introduced legislation in the house that would raise the reporting threshold from $600 to $5000. Senators Maggie Hassan (D-N.H.) and Kyrsten Sinema (D-Ariz.) have introduced similar legislation in the Senate. “
What does this mean for the future?
The not-so-hidden message in all this is that digital payment apps and soon-to-be available central bank digital currencies will eventually provide the government with a very convenient way of taxing every single transaction IN REAL TIME. That already happens when you make purchases in stores in the form of a retail sales tax. Ebay began collecting sales taxes a few years ago, but 1099-Ks were not issued unless they were over $20,000. That changes to $600 and one sale with the new law.
In the near future rather than trusting buyers and sellers to report a taxable transaction, they will simply be taxed digitally when the transaction is conducted. In other words, I sell you a couch at a garage sale. You pay me using an app. The app deducts 15% income tax and 8% retail tax off the top and sends it to the Treasury. Knowing this will happen, I add 20% to the price up front.
This will obviously place a much bigger tax burden on the poor who often survive in a cash economy. This will only be possible if cash is eliminated, of course. And if cryptocurrency is no longer anonymous. As you can see, cash and crypto are hindrances to taxation and government control of the economy. That reminds me of something I read somewhere about buying and selling and a special mark that will be needed.
How sickening. And scary. I guess the days of having fun selling are over.
Control! The issue is control.
$600 seems very low and arbitrary. How about $1K or 2K?
Getting a 1099 from PayPal isn’t that much of a burden. I’ve seen news stories on this and they explain that if you label a transaction “personal” it won’t count towards the $600 or what ever they end up at. So a friend paying you back for dinner or tickets won’t count.
There is a huge “informal” economy and many people have gone to these apps to collect payments.
The easiest way to avoid the tax man or any scrutiny at all is to use cash. Problem solved!
The rich have reduced their tax burden, so now the government needs to collect all they can from us little people. It would have been so much easier to leave the tax rates/rules where they were and leave us little fish alone!
I’m curious aw well about why they set it at $600 . I think it’s just because that’s the number Obama used . But it could’ve been $100 or $365. The goal is the same.
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