Posted on 10/06/2010 8:08:17 PM PDT by Windflier
As many of you know recent polls show an utter mistrust between the citizens of this great country and its government. The reasons for this are many and another one has just reared its ugly head: HR 4646-The Debt Free America Act.
This wonderful sounding new bill that is making its way through committee in the House of Representatives is what I have dubbed the “Trojan Horse Tax” for reasons that I will explain below but first the text of the bill itself. You see I actually believe that we should READ THE BILL first.
Debt Free America Act – States as purposes of this Act the raising of sufficient revenue from a fee on transactions to eliminate the national debt within seven years and the phasing out of the individual income tax.
Amends the Internal Revenue Code to impose a 1% fee, offset by a corresponding nonrefundable income tax credit, on transactions that use a payment instrument, including any check, cash, credit card, transfer of stock, bonds, or other financial instrument.
Defines “transaction” to include retail and wholesale sales, purchases of intermediate goods, and financial and intangible transactions.
Establishes in the legislative branch the Bipartisan Task Force for Responsible Fiscal Action to review the fiscal imbalance of the federal government and make recommendations to improve such imbalance.
Provides for expedited consideration by Congress of Task Force recommendations.
Repeals after 2017 the individual income tax, refundable and nonrefundable personal tax credits, and the alternative minimum tax (AMT) on individuals.
Directs the Secretary of the Treasury to:
(1) prioritize the repayment of the national debt to protect the fiscal stability of the United States; and
(2) study and report to Congress on the implementation of this Act. (Courtesy www.govtrack.us)
Immediately upon reading this people are taken in by the thought of abolishing the dreaded Income Tax Law. However, before you go swooning over this proposal and lend your support for this bill you should keep something in mind. Why would the federal government, which runs solely off of the income it collects from its citizens, kill the one thing that allows it to operate? It wouldn’t and that is where the “Trojan Horse” aspect of this tax comes into play. Just look at what this tax would entail:
Amends the Internal Revenue Code to impose a 1% fee, offset by a corresponding nonrefundable income tax credit, on transactions that use a payment instrument, including any check, cash, credit card, transfer of stock, bonds, or other financial instrument.
Defines “transaction” to include retail and wholesale sales, purchases of intermediate goods, and financial and intangible transactions.
Ask yourself this question: How many “transactions” that would fall under this particular definition are you involved with every day? 10, 20, 30? Once you realize what this will mean you start to get the picture of what this is.
Let’s say hypothetically that you are involved with 10-20 “transactions” daily. Then instead of paying a 1% tax you have now just paid a 10-20% tax. do you see how easily this can snowball?
Exactly. If I put my money in the bank, I don’t get charged a VAT. I only get charged a VAT if I spend it. This is a way for them to track where money is going.
Of course it won't. The Democrats make that same tired promise every time the raise taxes or create a new tax. In the end, they never have enough of our money to spend, and even put us into generational debt with deficit spending and unfunded mandates.
This has got to stop before the whole country implodes.
Excellent analysis, Vinnie. You’re right - you would not pay more than $10 out of $1,000 spent, no matter how many individual transactions it took to do it.
But - as you say, everyone on the production and consumption chain will pay 1% when those goods change hands, thus increasing the cost of every commodity in the marketplace.
And of course, the 1% rate is simply the camel getting his nose under the tent. It’ll go up and up, once it’s passed. It’s got to be stopped.
Stop spending !!! But not just that, Make the nation a business friendly atmosphere and get people working again. They would have revenue flowing in from all directions. That is ALL they need to do!
Just another reason why I barter for exchange of services to stay off the radar.
This draconian measure is nothing like the Fair Tax, which would only tax goods at the point of consumption.
This beast taxes you for depositing your paycheck in the bank. It taxes the furniture maker 1% for buying the lumber to produce the chair that you'll eventually pay a 1% federal tax on, when you purchase it.
This thing is something only a Commie would dream up. It's even worse than a VAT tax.
In other words they can spend as much as they want and just take it from us.
Donating to your local charity or giving a bum some spare change would qualify.
lol, you got to love these nuts sometimes, they don’t thing before they pass the bill.
No. Whether you spend your day's pay in one big transaction or a dozen little ones your tax is the same.
Now the problem is that you'll get hit for 1% when you are paid (it is a transaction). If you get a check, you'll pay an extra percent when you cash or deposit it (better ask your boss for cash). Next if you did deposit it you'll get nicked for another percent when you pull the money out to buy something or when you put it on a credit card ... and then another percent to pay the credit card bill.
Those few percent for a "1% tax" are just the start. Each business will have to pay 1% on every transaction all the way through the chain of production. This will give a huge incentive to companies to vertically integrate. Imagine two car companies. One contracts out everything other than the final assembly. They end up paying 1% to the iron miner, 1% to the steel maker, 1% to the company rolling the steel ingots into sheets, 1% to the company stamping out parts, etc. etc. Compare that to another company which merges the iron mines, steel plants, parts plants, oil drillers and refiners (for plastics), electronic manufacturers, dealerships, etc. None of the transactions between these divisions are taxable since they are just entries in the accounting books. The verically integrated company will be at a huge advantage. More likely to avoid all of this all the manufacturing will just be moved off-shore so companies don't have to mess around with a US transaction tax and only the final sale will be a US transaction for 1%.
Next, this will put a crimp in the number of transactions. People will start dealing with cash to avoid depositing, withdrawing and moving money around to minimize taxes. Pull $300 billion out of the banks (only $1000 per person, which might be a lowball estimate) and you will remove trillions of dollars from the system because of the multiplier effect of our fractional reserve system - much like our current recession where banks are less willing to lend thus destroying many times that lending shortfall.
I can think of few taxes as bad as the transaction tax. Even a VAT would be far less destructive. Hell, even our current monstrosity of a tax code is better than a transaction tax.
I said much the same thing upthread. This monstrosity needs to be killed in committee. It can never be allowed to see the light of day - it's that bad.
It's not the actual single consumer purchase that causes the purchased item to be so expensive...it's the value-added rate at every single step along the way, collected by (who else) the "government", that would price items including food at a much higher price than one would expect. Just think about how many different commodities dealers and workers are involved in getting a loaf of Wonder Bread to the family table??!
Plus, even if that was a "break-even" free-market proposition as opposed to the way the grocers manage to do it now (which I doubt)...
...and even if there was a repeal of all other income/property/etc. taxes (which I'd also be skeptical would actually happen)...
...THEN, you can be pretty darn sure that certain other things like local trash pick-up and state license tag renewal FEES would continue to be raised...because, after all, those aren't "tax" hikes, just "fee adjustments"...and too many in local/state/federal government will find a way to raise the revenues they think they need, no matter how they have to do it.
Don't be fooled by candidates, don't be unrealistic about options, and DO VOTE!
/ soapbox, lol
Washington Democrats have become a ruling oligarchy, who feel that the Constitution is just so much ancient, outmoded, and incomprehensible blather from a bunch of dead white guys in powdered wigs. Doesn't mean a damn thing to them.
Just listen to some of their recent comments about our Founding Document for proof of this.
These petty tyrants and uber-Socialists believe that all money belongs to the government, and it's their right to "take back" as much of it as they want, through whatever means they care to contrive.
They're ignorant of history, and obviously don't understand that we fought a bloody revolution over this very thing, over 200 years ago. If they think we won't do it again, they're in for a terrible surprise.
I think the left are all mentally ill. I think its becoming more and more pronounced.
I'm long past thinking that the left is mentally deranged. I've known that they are, for a very long time now. They only pile on more and more proof of that certainty with every passing day.
camel nose tent
That's what it is. It's got to be stopped.
It will be implemented thru the newly established vehicle, the Bureau of Financial Protection completely housed within, and under complete control of, the Federal Reserve. Watch.
Every move will be archived by the Bureau for the avialability to the IRS. Sooner than we think, money will be deducted and accounted for directly as you buy or sell anything in real time.
We have been placed under the control of the Federal Reserve as individuals through our bank accounts, credit-debit cards, etc. The move is a form of disenfranchisement as we are only required to comply. Our political representatives in Congress are no longer available for redress. We have been outsourced to the Fed Reserve for its purposes.
According to the proposed bill, it puts a "teeny tiny surcharge" (how long would it stay teeny tiny, pray tell?) on every "financial transaction", whether by check, credit card, or cash...
So, I buy a pack of gum, which is already ridiculously over-priced IMHO, and it costs extra for me, the merchant, the supplier, the manufacturer. So much for a buck!!
Then, I have a small amount of money in a C.D., I make .002 % interest, but it is a "financial transaction" when I go in to re-invest it...talk about adding insult to injury!
This is NOT SUSTAINABLE! (to use a favorite buzz-word these days)
What are they THINKING?!?!
(actually, never mind that last line - just VOTE to stop THOSE people, who are clearly insane - the answer is NOT more government regulation to confiscate and redistribute individual assets!! If the wealthy have ill-gotten gains, they can be sued...if the indigent are truly needy, they will be helped...but I want to use any little extra amount of money I might have to take care of my own family, friends, community, retirement...I do not want to contribute to Washington's "choice of beneficiary", first channeled through 16 highly paid beaureucrats - sic - )
/ rant
We have this in Hawaii. It’s known as a “general excise tax,” and imposed each time a good or service changes hands.
It’s one of the most onerous taxes known, because of the multiplier effect, since each time a product changes hands, for example, from the importer to the wholesaler, from the wholesaler to the retailer, and then from the retailer to the consumer, a tax is paid and then built into the price at the next level, on which a tax is paid both on the product and the tax that has already been paid, etc. But since the tax is buried in the price of the good, the person paying for it doesn’t realize the price has already been inflated by prior taxes.
In Hawaii we have an excise tax that has a nominal rate of 4% (plus a rail tax on Oahu for a nonexistent rail system). Economists say that the nominal “4%” tax actually is equivalent to a 12-13% sales tax.
“This is a Value Added Tax, or VAT.”
No, it’s worse. A VAT only applies to the increased value added at each step of production. This is a TRANSACTION tax, so that it is applied to raw materials, then applied to the full value of the raw materials again each time the product moves through the next stage of manufacturing. So that all becomes embedded in the products you buy. But personally, you get taxed when you are paid, again if you move money from checking to savings or IRA or brokerage account, then again when you withdraw money as cash, then again when you use your cash to buy something.
You can tell how bad it would be just by the stated goal in the text of the law. Pay off $14T in National Debt in 7 years ?? That tells you there is another $2T/yr of tax revenues expected — TRIPLING the current Income Tax revenues from $1T to $3T.
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