Fattah's solution to America's debt problem
The Philadelphia Democrat has long advocated using "transaction fees" to raise revenue to pay down trillions in U.S. debt.
Fattah's solution to America's debt problem
Mike Armstrong, Inquirer Columnist
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?
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Since the politicians contributed to the financial mess, let them be taxed 75% until they get their cronies, family, off the payroll. Let them cut their staff by l/2 as from the proposals submitted, not worth their salaries. What is so hard to understand about them cutting costs. The only cuts proposed are to libraries, firemen and police but just try to find a government site online whether federal, state, city, or local - there must be a gazillion offices. Maybe the saying "off with their heads" should apply.— hilite98- Comment removed.
Wouldn't people just go back to writing checks or paying in cash for everything, I know I would— tcpgolf
I say cut spend too. Start with the department of defense. 50% reduction across the board next fiscal year. Then move onto national intelligence budget. Maybe 80% reduction next fiscal year. Close down FBI bank robbery unit. Close down OPIC. Close down import export bank. Close down Voice of America. Close down department of Agriculture, all by next fiscal year.- I am glad to see Congressman Fattah getting on the Flat-Tax bandwagonl! As I have said many times, if a mere 10 percent of the monies spent on "tax avoidance" (fees to Lawyers, Accountants, Insurance Agents, and assorted other Scheme Promoters) was directed to productive purposes, not only would the GDP of the country rise dramatically, but so would the tax collectors take. Now then lets tackle spending cuts... but that is actually a joke friends... a joke... everyone knows that Congress -- Democrat or Republican controlled -- not only has never, but will never cut spending. They are all to busy trying to figure out how to get a deal like Nebraska got.— magill
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- How about 50% tax increase and 50% spending cuts. To simple?— neddyflanders
- I admit - I opened this article expecting to have a good laugh. But Fattah surprised me; this isn't such a bad plan. IN fact, it more closely resembles the tax system that the US employed before the creation of the income tax. While I'm no economist, it surely makes sense to tax transactions (just like the VAT in Europe), as long as it is balanced with the credits outlined. It creates a form of income equality for incomes between minimum and $100k (which is really what the flat-tax people should be asking for) and rids us of the ability to evade taxes as individuals or corporations. States employ sales taxes - why not the feds?— citylumberjack
- Fattah's idea is theoretically sound. As the old adage goes, the devils in the details. If there were a way to force elected officials to implement the tax as a debt reduction tax ONLY, it would be a great idea. If, in ten years, the US debt could be eliminated, it would improve the economic situation of every US taxpayer. Unfortunately, cutting spending won't reduce the Federal deficit unless everything is on the table. NOT POSSIBLE. Entitlement (don't you just love that term) programs have special interest group backing that absolutely prevents cutting their sacred cows. Whether it's supplemental social security payments (an abomination for the greater part), Medicaid (socialized medicine for a favored group that taxpayers pay for), Farm support programs (welfare for the rich), etc., etc., etc. However, the elimination of the US debt, frees up at the very least 30% of the federal budget and that could be the cut in spending that would have the best bang for the buck for the average taxpayer. Given the lack of integrity on the part of most elected officials, the ability to implement Mr. Fattah's program would seem to be an impossible task regardless of it's long term benefits to the American taxpayer.— Semper Fi Joe
- The way taxes are collected aren't the problem of debt. If he is saying you can pay down $7 trillion in debt by restructuring the tax system, it means he is planning to take an additional $7 trillion out of the economy over 10 years via taxation over the current method. There is no free lunch. It's a spending problem, not a revenue problem.— Adam Lang
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980.
Reach Mike at marmstrong@phillynews.com.
