Carolyn Maloney must be furious.
This career politician with five decades of experience, as I wrote in at the very beginning of the year, was the chief architect of a completely ridiculous law known as the Corporate Transparency Act (CTA) which went into effect on January 1st.
The CTA was one of the dumbest pieces of legislation I have seen in a very long time. The entire premise is the classic boogeyman story that evil criminals and terrorists use US corporations to conduct their illicit activities.
This is the same lame excuse that politicians use to sh*t all over crypto.
And of course, it’s partially true. Sometimes criminals and terrorist do use US corporations and LLC structures to launder money. Sometimes they use crypto.
But criminals and terrorists also use JP Morgan Chase, HSBC, Visa, Mastercard, American Express, PayPal, US government bonds, Amazon gift cards, Verizon Wireless, iPhones, and Ford F-150 pickup trucks.
It’s not clear to me why politicians like Carolyn Maloney insist on calling out specific assets like cryptocurrency… or now US corporations/LLCs. But hey, these people have decades of experience, so they must know what they’re talking about.
(As an aside– how many people in this world are so good at what they do that they keep their jobs for decades? Even championship sports coaches and highly successful CEOs eventually get canned for poor performance. But politics is teeming with people who never seem to get fired…)
When the CTA went into effect earlier this year, I also pointed out that the US already has dozens of laws and regulations on the books which are supposed to prevent money laundering and financial crime.
But apparently Congress didn’t think those laws were effective enough… so they created a NEW law, i.e. the CTA. Naturally they didn’t bother repealing the old, ineffective laws. They just piled on more rules.
And this is how the government almost always operates. They don’t repeal stupid laws or destructive regulations. They just keep adding more and more each year. That’s why the Code of Federal Regulations goes on for roughly 200,000 pages.
Of course, it’s YOUR responsibility to keep up with all of these rules. As the old saying goes, ignorance of the law is not an excuse.
You’d think that the government would have at least invested some money in a public awareness campaign to inform the American public about this law, given that it impacts literally tens of millions of people.
But they didn’t do that. They passed the law and said nary a word about it when it went into effect in January. The only thing they DID do was impose a harsh penalty for non-compliance: up to two years in federal prison.
Perhaps the even more bizarre part about the CTA was that it is completely redundant.
The law requires EVERY small business in America to file a special report with the federal government– specifically the Financial Crimes Enforcement Network (FinCEN)– as if it’s some sort of crime to own a business anymore.
And I say ‘small business’ deliberately, because the CTA does not apply to big businesses, Wall Street banks, etc. It specifically targets the little guy.
The report is just a bunch of personal information about the owners, officers, and directors of the company. Names, addresses, that sort of thing.
This is the exact same information that taxpayers already have to provide to the IRS. So, the CTA just doubled the requirement to provide a similar report (but in a different format) to a different agency.
In sum, politicians think that criminals use US companies to launder money. There are already laws on the books to prevent criminals from doing this.
But rather than repeal and replace the inefficient laws, they piled on a new law which requires small businesses to submit a new report to FinCEN, even though the report contains the exact same information taxpayers already disclose to the IRS. Noncompliance is punishable by up to of two years in federal prison. But they didn’t say a word about it to anyone.
Such is the genius of people with decades of experience in politics.
Well, a few days ago we received a little ray of sunshine from a federal judge, who ruled that the Corporate Transparency Act is flat-out unconstitutional and goes beyond “the limits imposed by the Constitution on the legislative branch”.
This is absolutely a victory for sanity… and exactly the sort of thing we would want to see in the US.
As I’ve written so many times, the US is on a path to obvious financial ruin. The national debt is already $34+ trillion, and the government itself forecasts another $20+ trillion in new debt over the next decade.
It won’t be long (5-7 years at best) before the rapidly growing annual interest bill on that mountain of debt becomes an unaffordable catastrophe.
And the only realistic way out of this mess is for the US economy to be firing on all cylinders, with maximum productivity and efficiency. The more productive the economy, the greater the government’s tax revenue… which helps reduce the deficit and alleviate the debt pressure.
Laws like the CTA are a step in the wrong direction; it’s just pointless, time-wasting, money-wasting bureaucracy that makes people and businesses LESS productive.
So, the fact that a judge ruled it unconstitutional is a good thing.
The federal government, of course, will most likely appeal the decision. (Or they’ll simply ignore the court’s ruling altogether, which has been a popular approach with the Biden administration.)
So, if you haven’t filed your CTA report yet, you might consider waiting a little while longer to see how this plays out. There’s still plenty of time before the December 31st deadline, so it’s unlikely anyone will be hauled off in shackles anytime soon for not filing.
