https://thehill.com/opinion/finance/6034366-congress-must-end-cta/

Rep. Warren Davidson (R-OH)

Washington has a habit of giving bad ideas reassuring names. The Inflation Reduction Act was a $2 trillion tax-and-spend law sold as a measure to curb inflation. The Affordable Care Act increased government regulation in health care and reduced competition, ultimately driving up costs. The Patriot Act vastly expanded the federal government’s surveillance powers under the banner of protecting Americans. The Corporate Transparency Act is another misleadingly named law, imposing a sweeping federal reporting regime on millions of small businesses in the name of fighting financial crime.

The name suggests requiring large corporations to be more transparent about their ownership, operations, or dealings with the government, particularly when those structures are being used to conceal criminal activity. It certainly does not suggest treating the volunteer president of a neighborhood homeowner’s association or the owner of a one-person business like a potential money launderer, forcing them to turn over sensitive personal information to the federal government under threat of fines and criminal penalties. Yet that is where the law landed. All large companies are exempt, while millions of small businesses and other entities were swept into its reporting regime.

That sweeping burden might be easier to defend if it actually worked. But the Corporate Transparency Act reflects another bad habit in Washington: measuring success by how much government does rather than by the results it produces. As President Ronald Reagan said, “The nine most terrifying words in the English language are “I’m from the government, and I’m here to help.” When an issue is identified, the response is often to spend more money and require more paperwork so politicians can claim they are doing something about it. Our anti-money-laundering regime is a textbook example.

The Financial Crimes Enforcement Network receives nearly 5 million suspicious activity reports and more than 21 million currency transaction reports every year, yet the Government Accountability Office found that law enforcement looks at only 5.4 percent of those currency transaction reports. Despite all that reporting, only about 1 percent of laundered proceeds are ever intercepted.

Under the Biden administration’s implementation of the Corporate Transparency Act, millions of small-business owners were treated as potential criminals or money launderers simply because they owned a business. They were required to provide personally identifiable information to the Financial Crimes Enforcement Network and keep those records current, even when there was no evidence of wrongdoing. For a one-person business, that meant another federal compliance mandate. For some homeowners associations, even changes in volunteer leadership could trigger new reporting requirements. That is backwards. In America, the government should have evidence of wrongdoing before demanding sensitive information from its citizens.

Small-business owners should be focused on serving their customers, growing their businesses, and creating jobs, not wondering whether a future administration will once again force them to report personal information to Washington. President Trump has protected small businesses from needlessly reporting their sensitive information for now. Congress should make that protection permanent by repealing the Corporate Transparency Act.

Warren Davidson, a member of the House Financial Services Committee, represents Ohio’s 8th District in Congress.