Friday, September 3, 2010

Rumor? Transaction Tax Hot Topic For November

Tax and spend to get a nation out of debt is a golden oldie

They say the 1% bank transaction tax has the same chances as
a snowball surviving hell.

But that's what they said about income tax, women's
suffrage, the civil rights act and a manned flight to the


If it survives the elections, it could become a reality in a
lame duck Congressional session.

And besides, it's the oldest form of tax in the United
Kingdom, adopted in 1694 as the Stamp Duty at the London
Stock Exchange and payable by all traders to ratify their

Somebody was in the hole way back in that century, no doubt.

Introduced in Februrary, the Debt Free America Act, H.R.
, would impose a a 1% tax on all bank transactions,
including automatic deposits, withdrawals, debit card
transactions, balance transfers or anything else you can do
with folding money passing through the temples of Mammon.

Its purpose, as stated in the bill's preamble, "the raising
of suficient revenue from a fee on transactions to eliminate
the national debt within seven years and the phasing out of
the individual income tax," is straightforward enough.

There is a sticking point. The bill has only one sponsor,
its author, U.S. Representative Chaka Fattah, (D-Pa).

Born Arthur Davenport in 1956, the former state legislator
represents Pennsylvania's 2nd District, which includes North
and West Philadelphia and a small portion of Cheltenham
Township. He has helped the Obama Adminstration engineer
such capers as $5.1 billion in relief for unemployed
homeowners facing foreclosure.

Here is the way the bill would work, if and when it passes.

A transaction is defined to include retail and wholesale
sales, purchase of intermediate goods and any financial and
intangible transaction. All transactions involving the use
of a payment instrument, including any check, cash, credit
card, transfer of stock, bonds, or other financial
instrument, would be taxed at the rate of 1%.

The act would establish in the executive branch the
Bipartisan Task Force for Responsible Fiscal Action to
"review the fiscal imbalance of the federal government" and
"make recommendations" to improve the situation. The act
would furthermore direct the Secretary of the Treasury to
prioritize the repayment of the national debt to protect the
fiscal stabiity of the U.S. and study and report to Congress
on the implementation of the Act.

By amending the Internal Revenue Code to impose the tax, the
act would also offset, by a corresponding nonrefundable
income tax credit, taxes on personal income.

It would repeal after 2017 the individual income tax and
would provide for individuals making less than $125,000 to
receive credit equal to 1% of their income against the tax.
It also would give the Treasury Department the discretionary
power to exempt certain transactions on which lower-income
people "disproportionately rely."

Is it a new idea?

Not really.

In the depths of the Great Depression, economist John
Maynard Keynes was an early advocate for the wider use of
financial transaction taxes because, he argued, excessive
speculation by uninformed financial traders increased market

Organized labor is lobbying on Capitol Hill and overseas to
get this and other tax schemes implemented worldwide, but
they face an uphill battle at the November G-20 summit in
Korea, according to knowledgeable insiders.

Their idea would include transactions of stocks, bonds,
derivatives, commodities and mutual funds shares.

It's a notion that is widely opposed, due to fears that a
slowly recovering global economy would only be further
slowed by a new tax on speculators.

The G-20 is that upstart organization, memberhship in which
is "balanced" between developed and undeveloped nations,
which meets yearly to attack problems caused by speculators.
It was founded in 1999 in the wake of the 1997 Asian
financial crisis in an effort to stabilize the global
financial market.

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