But the banking industry’s desire for sympathetic treatment by government would stand on much firmer ground if not for its own form of radicalism. In particular, consider its demagoguery on the simple issue of information-reporting to improve tax compliance.
Here are the facts: Where there is information-reporting to the government on taxable payments — as with workers’ W-2s detailing wages, or 1099s that savers receive reporting on interest they’ve accrued — theWhere there is no such information-reporting, as with proprietorship income deposited at financial institutions, tax compliance is much worse — below 50 percent. In total, it is estimated that noncompliance will cost the federal government $7 trillion over the next decade.
have made clear that such a regime would be easily implementable and low-cost to financial institutions, building off the current information-reporting they already do on the interest income that accrues on their accounts.