Image via WikipediaImagine if you will, that you have a job. For the sake of simplicity, I will use round numbers. Now, lets say that every pay period you make $2000. After the government takes the withholding for federal, state, and Social Security taxes, you are left with a net check of $1500.
So far, so good. Now imagine that you take your check to the bank, or maybe you even have direct deposit to make your life easier. The way the money gets to the bank doesn't matter. Now the bank takes a $15 fee out of the check you brought to cash or deposit.
It doesn't stop there. After you get paid, you have bills to pay. Now again, it doesn't matter if you pay the bills using online bill pay or you write a check. To keep things simple, let's say you write a check to your mortgage company for $750 to cover principal, interest and anything else rolled into your mortgage. Your mortgage company adds another $7.50 to your bill as another fee.
Now you need to eat, right? So you head out to your local grocery store to pick up your shopping for the week. You go to the checkout with your groceries, and after everything is added up, along with any sales tax, the total comes to $100. You swipe our credit or debit card to pay the bill and have to add another $1 fee to the total.
Is this just another way for those greedy banks to profit off of the little man? Not exactly. This is exactly the scenario that Congressman Chaka Fattah (D-PA) has proposed in H.R. 4646 AKA The Debt Free America Act. Congressman Fattah is proposing a 1% tax on all transactions. The stated purpose of this tax is to pay down the national debt of $13 trillion within 7 years of passage. The funds are ONLY to be used to pay down the debt. In addition to paying down the debt, HR 4646 states as a goal the repeal of the federal income tax after the debt is paid down.
On the surface, the idea of paying down the debt and the elimination of the income tax is appealing. It is what lies beneath the surface that is disturbing. First, to pay down the debt in seven years would take about $2 trillion out of the economy every year. I am sure that will help the already anemic economy, NOT! Second, the text of the bill states that the "tentative" income tax rate will be 0% beginning in 2018. Have you ever known Congress to give up any taxes they have coming in? They will find a way to change the law to allow income taxes to continue. Lastly, we have heard before that certain taxes would be used solely for one purpose, like Social Security. How is that working out?