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The $1 Billion Tax Crackdown In The New COVID Bill

A tax expert warned that IRS penalties ‘can destroy a person’s life’ and said many gig economy workers won’t be able to afford this sudden tax crackdown

By guest author Brad Polumbo
March 14, 2021

When the economy is struggling to recover from a pandemic and crushing government lockdowns, that’s probably the worst time to impose a $1 billion tax crackdown on the working class. But that’s exactly what a new provision quietly slipped into the Democrats’ sweeping $1.9 trillion COVID legislation would do.

“A last-minute insert by Democrats looking to offset the cost of their coronavirus aid package would send tax collectors into the gig economy, eventually costing Uber and DoorDash drivers, Airbnb hosts and others about $1 billion annually,” Roll Call reports.

Under current tax law, earnings data for gig economy workers only needs to be reported to the IRS once it reaches $20,000. This means that small earners pursuing gig work to supplement their income aren’t hit by crushing federal taxes. However, the Democrats’ provision would nearly eliminate this benchmark, and instead require all income above $600 to be reported to the IRS.

“The stiffer tax burden would be imposed while 10 million Americans are unemployed and more and more have turned to freelance and gig economy work to make ends meet,” Roll Call notes.

Indeed it would, and this would be disastrous for both workers and the economy.

This tax crackdown “adds a significant burden to gig economy and small business workers at the worst possible time,” according to TechNet spokesman Steve Kidera. One tax expert warned Roll Call that many struggling gig economy workers won’t be able to pay the higher taxes, and that IRS penalties “can destroy a person’s life.”

It’s mind boggling to think that after a year of depriving workers of their incomes and strangling the economy with government lockdowns, politicians would really shoulder billions more in taxes onto working Americans’ backs. It’s even more aggravating when one realizes that this is being done to pay for a $1.9 trillion “COVID” package where at least 15 percent of the money goes to partisan spending priorities like Obamacare expansion and only 1 percent goes to COVID vaccine distribution.

If politicians really wanted to reduce the package’s price tag, they could instead start by eliminating the legislation’s countless examples of cronyism and waste. For example, Democrats could cut out the $1 billion their bill allocates for “racial justice” for farmers, the $1.5 million it spends on a bridge in New York that Chuck Schumer wants built, or the $112 million it earmarks for transit projects in California.

Instead, in a move sadly typically for Congress, our elected officials are choosing to crack down on the working class rather than eliminate waste and pet projects. This kind of political malpractice and fiscal irresponsibility will continue in Washington, DC until voters finally say enough is enough.

This piece was originally published on Fee.org under the title of “Democrats Just Snuck a $1 Billion Tax Crackdown on Workers Into Their COVID Bill