On February 23, HR 4646: Debt Free America Act was introduced "To establish a fee on transactions which would eliminate the national debt and replace the income tax on individuals."
Sponsor Representative Chaka Fattah's (D. PA) same day press release said:
The bill offers a "simple new approach to paying off the debt now escalating past" $13.6 trillion as of late October. "The breakthrough legislation proposes a 1 percent fee (on) all payment instruments including cash transactions, checks, credit cards, those processed through the Federal Reserve Bank, and those collected at the point of sale."
"In addition, taxpayers would receive a 1 percent tax credit for gross income up to $250,000 to offset the impact of the fee," supposedly helping middle and lower-earning households. The bill will also establish a Bipartisan Task Force for Responsible Fiscal Action "to control and limit federal spending." Once the debt "is paid down...broad-based tax reform" would follow.
The bill's text says:
(1) "The current tax structure creates economic distortions that limit growth and job creation."
(2) Complying takes five billion hours and about $200 billion.
(3) Tax code restructuring will promote economic prosperity.
(4) Replacing the federal income tax with a transactions fee will eliminate systemic inefficiency.
The bill aims to raise enough revenue in seven years to begin phasing out the personal income tax, a goal helping big earners more than lesser ones, and provides no help for the millions of low income households paying little or no tax. They, however, will be saddled with an immense burden if this bill passes.
The Bill's Key Section
SEC. 4501. IMPOSITION OF TRANSACTION FEE would impose "on every specified transaction a fee in an amount equal to 1 percent," defined as:
-- those "us(ing) a payment instrument, including any check, cash, credit card, transfer of stock, bonds, or other financial instrument;" and
-- those involving "retail and wholesale sales, purchases of intermediate goods, and financial and intangible transactions."
Persons become liable "at the moment (they exercise) control over a piece of property or service, regardless of the payment method."
Fees will be collected by sellers and will be paid to the Treasury Secretary. In case a person doesn't collect and pay as required, "such person shall become liable for the fee not so collected and paid over."
-- "transactions involving stock (and any options or derivatives with respect to stock) until -
(1) such time as the United States enters into an international agreement that regulates domestic and international stock exchanges, or
(2) the (Treasury) Secretary issues recommendations regarding the application of the fee as it applies to stock."
In other words, this bill will fleece middle and lower income Americans through a 1% national sales tax per transaction, exempting the rich from their stock and related financial ones. So imagine its unfair impact, esspecially against low income earners paying little or no federal income tax. They'll face a painful new burden if HR 4646 passes, but so will many middle income earners likely ending up more heavily taxed than now, and when it's clear it'll be too late to matter.
According to factcheck.org, Fattah originated the bill in 2004, called the Transform America Transaction Fee. He tried again in 2005 and 2007. Each attempt failed with no action taken. In late 2009, he introduced a fourth bill, still unaddressed in committee.
As of late October 2010, HR 4646 is stalled, but Fattah and others hope for lame duck session action. Though no administration official suggested it, anything is possible after November 2, given the hysteria for fiscal austerity, including constraining the national debt.
Fattah's bill has no sponsors. It remains in committee. Some reports falsely attribute it to Rep. Peter DeFazio (D. OR) and Senator Tom Harkin (D. IA) for a Senate version. Through a spokesperson, DeFazio said he neither co-sponsored or supports the measure:
"because it wrongly targets all financial transactions, rather than just focusing on the Wall Street speculators that got us into this economic mess. An average American making normal day-to-day transfers of money should not be taxed on" them.
In 2009, DeFazio, in fact, introduced HR 1068: Let Wall Street Pay for Wall Street's Bailout Act of 2009. He proposed a 0.25% tax, applied only to securities and commodities transactions, and would become zero once TARP (Troubled Asset Relieft Program) funds were repaid. It allocated $700 billion, a tiny fraction of the trillions recipients got.
Senator Harkin's co-measure was, S. 2927: Wall Street Fair Share Act. Both House and Senate bills stalled in committee.
In the last dozen years alone, various measures have surfaced to replace the income tax. None passed, hopefully the same fate for HR 4646.
According to Lanny Davis (former Clinton White House Counsel), writing in The Hill:
"I don't believe any new tax proposal can pass unless, at the same time, liberals are ready to cut entitlement programs (a distinct possibility post-election) and conservatives are ready to close corporate tax loopholes (not ones that matter and likely none at all). But of one thing I am certain: We are not going to dig ourselves out of this deep hole of debt that will burden our children and grandchildren and beyond unless all of us - Democrats and Republicans, liberals and conservatives - are forced to hold hands and jump into the pool together."
Davis represents elitists. His favored pain distribution affects ordinary people most, to continue shifting more wealth from them to the rich, and make America even more unequal than now.
A Final Comment
In the lame duck session, anything from wheeler-dealer pols is possible. Expect nothing for ordinary people. Whatever passes will cause greater pain for most at the worst time, so watch out.
Among other proposals, up for grabs are Social Security, Medicare, IRAs, and 401ks, the scheme being privatize them, earmark them for Wall Street, turn private pensions into worthless government annuities, and scam Americans out of their futures.
Fattah's 1% national sales tax fits right in, a stealth proposal to steal, largely exempting the rich, of course. America already has its greatest ever wealth disparity. Democrats and Republicans want it greater, a sad testimony to politics, American style, too deeply corrupted to fix.
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.