Debt Free America Act
This financial transactions bill H.R. 4646 Debt Free America Act has been introduced to the 111th Congress, referred to committees, and is scheduled to be voted on in late November before the new congress takes a seat in January. It is designed to eliminate the federal income tax within 7 years. Maybe it would be a good way to change the way we pay taxes to our government but, then again, maybe not. Unlike the FairTax proposal H.R. 25, we may not be given much time to evaluate it for ourselves.
Debt Free America Act – States as purposes of this Act the raising of sufficient revenue from a fee on transactions to eliminate the national debt within seven years and the phasing out of the individual income tax.
- Amends the Internal Revenue Code to impose a 1% fee, offset by a corresponding nonrefundable income tax credit, on transactions that use a payment instrument, including any check, cash, credit card, transfer of stock, bonds, or other financial instrument, the only exception being transactions involving the purchase or sale of stock. Defines “transaction” to include retail and wholesale sales, purchases of intermediate goods, and financial and intangible transactions.
- Establishes in the legislative branch the Bipartisan Task Force for Responsible Fiscal Action to review the fiscal imbalance of the federal government and make recommendations to improve such imbalance. Provides for expedited consideration by Congress of Task Force recommendations.
- Repeals after 2017 the individual income tax, refundable and nonrefundable personal tax credits, and the alternative minimum tax (AMT) on individuals.
- Directs the Secretary of the Treasury to: (1) prioritize the repayment of the national debt to protect the fiscal stability of the United States; and (2) study and report to Congress on the implementation of this Act.
Theoretically, everyone would pay one cent on the dollar for every such transaction in America every day — whether $3 million on a $300 million business acquisition, $300 on the purchase of a $30,000 car, or $5 on a $500 ATM withdrawal.
To reduce the impact of such a flat tax on the poor, Fattah’s bill provides for a 1 percent tax credit for couples earning $250,000 or less ($125,000 or less for individuals) and discretion by the Treasury Department to exempt certain transactions on which lower-income people disproportionately rely. Another idea would be to amend his bill to exempt all transactions below $500.
Using 2008 numbers as an example: There was $755 trillion in total transactions that year. If you deduct the exempted $312 million in stock transactions, that leaves $443 trillion as the tax base, minus the cost of the tax credit and other possible measures to soften the impact on the poor.