Digital IDs are step one to a central bank digital currency which is probably the greatest threat to individual liberty, privacy, and financial autonomy we will face in our lifetimes. Imagine a currency supply the government can manipulate at will, where the government has 100% visibility into every transactions you make big or small, where the government can print and un-print money at will or dictate where and how you spend it. And imagine when the political party you don't like is suddenly in control of this kind of power. Central banks already engage in enough shady behavior and market manipulation and if we give them this power, they will never give it back. This is a dangerous road imo. Plus, a CBDC provided a centralized database of all transactions can be hacked and leaked because that happens to all centralized databases, so now not only does the government know every transaction of yours, so does the world.
If we need the ability to do digital ID verification, there are decentralized opt-in ways to do this which don't pose these same threats of centralized control and provide a safe opt-out/safety valve mechanism if the people administering that system are not trustworthy. CBDCs provide no such alternative.
