We hear a lot of talk from my Republican colleagues in the House about fighting the problem of our national debt. Unfortunately, we hear little about solutions. We cast vote after vote on paltry efforts to carve one and a half percent of spending out of a small corner of our budget -- and the majority is having fun settling old scores in the process.
That hasn't left the time or energy or imagination for going after the root problem -- the need for a fair and equitable revenue stream to knock out our national debt and grow the economy.
The Debt Free America Act, which I've introduced , provides the road map to our nation's future. It's a bold plan to eliminate the national debt within 10 years. That's right, 10 years! It will generate job growth and economic expansion. The plan has created discussion, and controversy, in the previous Congress. But it is time to be thinking -- and acting -- outside the box.
The path to a Debt Free America is simple and straightforward: Place a transaction tax of 1 percent - just a penny on the dollar -- on all retail and financial transactions, except for personal bank account transactions and those involving financial stocks. Create a dedicated revenue stream targeted to the national debt. The tax expires after 10 years.
President Obama has made it clear what's at stake, "Without action, the accumulated weight of that structural deficit, of ever-increasing debt, will hobble our economy, it will cloud our future, and it will saddle every child in America with an intolerable burden."
Secretary of State Hillary Clinton has raised the stakes to global terms: "Today, more than ever, our ability to exercise global leadership depends on building a strong foundation here at home. That's why rising debt and crumbling infrastructure pose very real long-term national security threats."
The interest payments alone on our national debt will reach $916 billion by 2020, according to the Congressional Budget Office. That is enough to crowd out domestic spending, federal investment in the private sector, and gobble up half of all tax revenues.
That is absurd!!
The answer? It's a broad-based, 1 percent tax on transactions that go through the Federal Reserve. The funds will generate sufficient revenue over the next decade to reduce the debt with minimal impact to the average taxpayer. Based on the latest data available from the Federal Reserve, the annual volume of transactions, excluding stock transactions, in the U.S. economy is valued at approximately $445 trillion.
The Debt Free America Act is equitable, providing a 1 percent personal income tax credit for families earning up to 250,000 a year (or individuals up to $125,000). Ultimately, it will provide even further relief from our confusing tax code which even the Internal Revenue Service recognizes needs an overhaul.
The Debt Free America Act provides the framework for fundamental reform of the federal system of taxation by eliminating -- once the debt is paid down -- the federal personal income tax and the Alternative Minimum Tax (AMT).
While so many voices in Congress are drowning each other out, the Debt Free America Act sends a clarion call, it is a clear, one-of-a-kind proposal. It is the only legislation before the Congress that would pay down the federal debt within a decade. Other proposals either take too long or don't go far enough to address the problem.
For example, the House Republicans "Roadmap for America's Future Act of 2010" would pay down the debt in 80 years according to Congressional Budget Office scoring. And the National Commission on Fiscal Responsibility and Reform, created from an executive order by President Obama, proposes to raise $1 trillion, in revenue by reducing or eliminating most tax expenditures, while imposing a 15 cent per gallon gasoline tax.
Here is a plan to take responsibility, and responsible action for our crushing national debt while offering the prospect of growth and greatness. We owe this to ourselves, our children, our grandchildren. We owe the next generations a Debt Free America.
Follow Rep. Chaka Fattah on Twitter: www.twitter.com/ChakaFattah
I'm not surprised politicians want to get between people conducting business, and extract a toll on every transaction. Why didn't he propose a new tax on the sale of a home? Isn't it a financial transaction as well? It just shows, he's attacking those invested in the productive sector of the economy, and what he hopes to accomplish (besides generating campaign cash from those who want to avoid being affected, plus those who want more government spending) is to create a crack in the foundation of our economy.
Nobel Peace Award and he started or escalated 4 wars
So called Constitutional Scholar and doesnt know the Constitution
This is great. I just want to see his elusive College records
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I very much enjoyed reading Rep. Fattah’s comments on HuffPo, and was struck how it is virtually the mirror reflection of my own One Cent Solution. He would add a penny tax on all financial transactions except for personal bank account transactions and those involving financial stocks.
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My One Cent Solution would eliminate one penny of every dollar spent for the next five years -- and balance the budget by 2016. Â (See my blog post about this article: http://www.onecentsolution.org/2011/03/22/id-flip-over-congressman-fattahs-penny/)
What's even funnier is, the Reps play the same game.
Democratic principles, values are still what most folks believe in: fairness, the common good, govt working for everybody, justice for all but the dems failed to create the narrative to explain your policies in those terms. Dems let the republicans create, write, and sold the narrative against you all.
Demonstrations in Wisconsin, Ohio, PA are examples of people fighting for their beliefs against radical conservatives where congressional dems have failed to articulate the damaging effect of 'free market' principles on ordinary folks. You don't talk about these radical 'free market' governors that got elected in Nov 2010 giving tax cuts to businesses in their states while laying of public service workers claiming they have deficits. They created the deficits w their tax cuts, now cry they are 'broke'.
Dems, the hope American people is not the damaging 'free market' doctrine that conservatives have been doing for 30 yrs.
Case and point: Social Security
Once upon a time (in the early 1980s) SS taxes were ~5.4% (10.8% total when employee and employer are combined) and officials successfully advocated for raising the taxes over subsequent years in order to maintain the solvency of the program. So we raised it...and then Congress used the new revenue on discretionary spending, tax cuts, and wars. Now officials are asking for another tax increase in order to "save" us. If we're stupid enough to simply accede to such a request then we deserve the government that we get.
Also, here's the link regarding SS taxes over the years:
http://www.ssa.gov/oact/progdata/oasdiRates.html
If Clinton's economic pan was still in effect today, we would be on the path to a Debt-Free USA by the end of next year.
Instead, we got the first President to achieve office by not counting votes. Remember him? George W, "Lucky me, I hit the trifecta." And his cohort, Dick "Reagan proved that deficits don't matter."
Plus Bill Frist and Dennis Hastert. And the rest is history.
Debt-Free by next year! Let that sink in a little while.
Congress and the government must be cut off at the knees when it comes to money, you have all put us on the path to ruin.
Although I like your out-of-the-box thinking, you are wildly mistaken that our problem is a revenue problem. Collecting more tax revenue is really a matter of treating the symptoms instead of curing the disease.
Spending is the disease and no amount of revenue generation is going to fix that without first addressing the drivers of excess spending. The incentives to spend will always outpace the incentives to save, the incentives to give today will always take precedence over the incentives to provide for tomorrow, the incentives to entitle the few will always outweigh the incentives protect the property, wealth and income of the many.
Before any new revenue generating taxes are approved, our congress should first work out how money is appropriated and fix the system that has caused such imbalances. A true balanced budget amendment is a must. Obama could not even keep to his Pay-Go promise for more than a month before he, and his party, were violating it and blaming the Republicans for being obstinate. His spending is reckless and other Presidents will be also unless we change how congress can spend.
1 cent does not seem like a lot, but for those that operate in the margins it is. Tax is distortive and has always led to changes in investment, transaction and savings behavior…and usually not in a good way.
Kai
California is the poster child for a balanced budget amendment need. It borrows for operating expenses instead of infrastructure or one off investments. It’s debt has gotten to a point now that the vig is starting to kick in and limit their options.
They tax a lot. Revenue is not their problem. But as companies and the wealth redomicile out of their country, it is an exemplar of what will happen to the US is we continue down this road. The most productive elements of our society leaving to find domeciles that offer a better business environment, less tax, less regulation, less government intrusion.
Kai
In the simplest terms, government creates money through spending and eliminates money through taxation. The government just needs to keep these two activities in balance over the long term to promote the overall health of the economy, which is what I think Representative Fattah is attempting to do.
No argue on the balancing part. But the he is trying to balance the wrong side of the equation…he needs to bring spending back in line, not bring taxations revenue which, as a percentage of GDP, is not too far from where it has been since the 1950’s and 60's, 18%, when we had high marginal and corporate tax rates.
People are not understanding the magnitude of tax competition and how it sucks productive capital and resources out of inefficient high-tax countries and relocates them to efficient low-tax countries, ceteris paribus
Kai
You cannot spend your way out of debt, and you cannot borrow your way to prosperity.