Democrats are still singing the same ol’ tune in our deficit problem, and that is raising more taxes. Rep. Chaka Fattah (D-PA) introduces H.R. 4646, misguidedly named “Debt Free America Act,” which would take one percent of each financial transaction. That means each sale of a good or service, and even ATM withdrawals.
Lanny Davis of The Hill is warm to the idea:
We all know there is only one answer to paying down the debt and balancing the budget: cutting spending and raising taxes. Both are necessary. Getting leaders of both parties to be honest about that and to have the courage to do something about it is the great challenge faced by the Bipartisan National Commission on Fiscal Responsibility and Reform — headed by Erskine Bowles, former Clinton White House chief of staff and currently president of the University of North Carolina — and Alan Simpson, former Republican senator from Wyoming.
One idea for raising taxes to pay down the debt is the bill introduced this February by Rep. Chaka Fattah (D-Pa.). His “Debt Free America Act” (H.R. 4646) would impose a 1 percent “transaction tax” on every financial transaction — whether paid by cash, credit card or any form of financial transfer, the only exception being transactions involving the purchase or sale of stock. 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.
Indeed “cutting spending and raising taxes” may be the logical solution to America’s enormous debt, but at this time of our economy? When nearby one in four Americans are out of work or given up on finding a job? When thousands more are upside down on their home mortgages? When people are struggling with personal credit issues?
The economy right now needs stimulation, and the White House-backed, Congress-passed stimulus packages had negligible impact. Clearly one way to stimulate the economy is to allow Americans to keep more of their money, so they can pay down debts, avoid mortgage delinquencies, and hire employees. In essence, lowering taxes. Higher taxes have proven to be detrimental, just compare the neighboring states of New York and New Jersey.
Besides, I think Davis put way too much trust in Congress:
To prevent future Congresses from raiding the proceeds from this “dedicated” debt reduction transaction tax, Congress could establish a separate trust fund, controlled by trustees, not the Treasury Department, who are by law instructed to transfer all proceeds from the transaction tax only to pay down the national debt (and possibly reduce the deficit) and for no other purpose. Congress could also require that only by a two-thirds vote of both houses could such trustee instructions be changed and the proceeds used for other purposes.
Look at the whole mess that is the Social Security system. That money wasn’t supposed to be touched except to pay retirees, but we all know future generations won’t be able to get that money at all. Congress has plundered and raided the Social Security money that belongs to Americans. Frankly, at this juncture in our nation’s history, I have little faith in the integrity of the current Washington establishment, and polls have suggested that I am not alone.
So that was just the part about taxes. How come nobody is writing about the spending? To me that’s the far more serious problem in the whole scheme of things. Many European nations have acknowledged this brutal reality and implemented austerity policies, but not the Democrats in the White House and Congress!
Why don’t we try something else for a change, Rep. Fattah, if you so care about our record debt: cut spending and cut taxes.
