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.
I’ve heard of something like this before. They really need to address the corporate income tax; they could eliminate it and make the rate 1.3%. I wonder what the economic distortion is on this type of tax. Seems like it would be an extremely broad tax. I expect it cascades to get such a low rate, unless the tax base is just so massive with all those transactions, that it makes up for it. All foreign transactions with the U.S. would probably be subject to it. It’s got my interest, though I could do away with the credit.
Morph,
This act is an intentional infection of the American economy with a low-grade fever. Even more pernicious, it gives people the impression that government costs notiong, and people then start to demand more of it.
The FairTax is just the opposite.
~Jim Bennett,
Summit, NJ
A transaction tax is no different than ‘cutting the pot’ in a poker game.
For each hand of poker played, if there is a 1% cut by the house, eventually all the money will go to the house.
This is a scheme for government to get all the money.
Phelbers
I have not studied this plan thoroughly, yet.
However, it does not appear to address our WELFARE budget of about $1T a year. Welfare is 1) un-constitutional wealth redistribution, 2) unaffordable and 3) more harmful than helpful.
Also, it reeks of Progressive/Socialist principles of wealth redistribution in that for example, it suggests the means-testing of SS benefits – i.e., a retroactiuve srewing of people who have paid PROGRESSIVELY for this “benefit” which was never a good financial deal for workers.
Said the Fair Tax will eliminate the IRS. According to Fair Tax Act-2005, there shall be in the Department of the Treasury, a Sales Tax Bureau. The Office of Revenue Allocation within the Sales Tax Bureau plus Problem Resolution Office. 3 offices. With the income tax, just the IRS. IRS under another name. Just show Fair Tax can spread a good lie.
I don’t like the way it proposes to untax the poor (i.e. 1% tax credit). While that might be a simple way to stick it to the wealthy, if the tax goes away, it’s almost certain the tax credit will not.
unless i’m reading that wrong, it proposes to charge 1% on every ATM withdrawl AND 1% on every cash purchase of retail goods?
so, i’ll save 1% making one transaction with my debit card instead of two transactions (atm card and cash)?
sounds more like a way to push even more people into using e-money.
No even debt cards gets the fee. Only one item does not get the fee, stock.
Stephen Eldridge: “Also, it reeks of Progressive/Socialist principles of wealth redistribution in that for example, it suggests the means-testing of SS benefits – i.e., a retroactiuve srewing of people who have paid PROGRESSIVELY for this “benefit” which was never a good financial deal for workers.”
..that OR it reeks of Christian principles of helping the poor. When I lost my job I immediately went out to look for another one, I didn’t automatically run to the welfare office. But after weeks of being told “we’re not hiring,” “we’re actually cutting staff and firing people,” and seeing “Closed” and “foreclosed” signs on almost all the previously-prosperous buisnesses in my town, and with bills coming due, I had to take drastic measures. Yes, welfare is a last resort and only temporary for me, in fact the day I applied for welfare I had three job interviews lined up and bragged to my worker that I may not need the welfare. But I got Food Stamps, Unemployment, and emergency loans for my more dire bills and was thankful for that. For me, Stephen, welfare was more helpful than harmful. I eventually did get a job and got off welfare and have been off it for almost 2 years now.
John bailey: “6.I don’t like the way it proposes to untax the poor (i.e. 1% tax credit). While that might be a simple way to stick it to the wealthy, if the tax goes away, it’s almost certain the tax credit will not.”
John, you can’t squeeze blood from a turnip. The poor can’t pay taxes if they don’t have the money to pay them with, which is why they are poor. They have no money. This is not about “sticking it to the wealthy,” its simply about who can afford it and who can’t. Its not reward or punishment, just simple math.
Chris,
Re#9:
You are correct, you can’t get blood from a turnip. I am against the tax itself for all Americans, not just the poor or rich.
My comment was about the tax credit. As I understand it, the poor, middle class, rich would all have to pay the tax at the time of the withdrawl. To aid those who are not wealth (making under $250,000/year) they get a tax credit, which is filed during income tax time. This enables them to recoup the taxes paid. If the tax were to get repealed, my fear is that the tax credit would not, so it means more welfare for those not paying any taxes and subsidizes those who do pay taxes but earn less than $250,000.
In the end it ends up increasing the tax burden on the wealthy who already shoulder the majority of the burden.
Back to getting blood from a turnip. There is a huge difference between those in this country who literally don’t have anything and can’t afford a product anymore if it goes up 1%, and those depicted as poor by the media and even goverment statistics. Many of the so called poor have TVs, air conditioned homes, more than one car, cell phones, internet access (in their home), cable and a reasonably sized house or apartment. Yet for some reason they are deemed too poor to participate in financing our Federal government.