Worried about the United States drowning in debt?
So is U.S. Rep. Chaka Fattah.
For about six years, he has been banging the drum not only to eliminate the federal debt but change the byzantine U.S. tax system.
In 2004, Fattah introduced a bill that would replace all federal taxes with a small fee on the trillions of cash and electronic transactions that occur each day. Implementing his “Transform America Transaction Tax” would have paid down the national debt, then at $7 trillion, in 10 years, he said at the time.
Now, the national debt is expected to exceed $14 trillion, and the eight-term Democrat from Philadelphia is back with his “Debt Free America Act.” It would levy a 1 percent fee on all types of transactions, except those involving stock trading because that activity would flee offshore.
He told me he’d cover everything from writing a $10,000 check to his daughter to buying NBC Universal.
Sound like a value-added tax, which is used in Europe, or a national sales tax? Fattah’s plan has elements of those, as well as Nobel laureate James Tobin’s tax on financial transactions. He calls it a “consumption-plus” tax.
All tax revenue generated would be used to pay down the national debt in about seven years, he said. Once the debt was gone, transaction fees would make it possible to replace the income tax.
It all sounds so simple. But already I wonder who’d collect the fees and monitor compliance.
To avoid whacking Americans in the low- to middle-income brackets with a new tax, what is now called H.R. 4646 would provide a 1 percent tax credit for gross income up to $250,000 for married couples and $100,000 for individuals.
Fattah said the Treasury Department may decide some transactions aren’t worth taxing. But in the interest of fairness, everything should be in play, he said. Your rent, electric bill, trip to the grocery store, all of it.
The U.S. must come to grips with its debt problem, Fattah said. What do you think of his solution?