Vast Majority of Bills Go Nowhere (Debt Free America Edition)September 20, 2010 - by Donny Shaw
Here we have yet another example of an oddball bill in Congress being used, inappropriately , as evidence for something unpopular that “the government” is supposedly trying to do.
The Debt Free America Act, which would replace the individual income tax with a new 1% tax on every consumer financial transaction, was introduced in the House of Representatives on Feb. 23, 2010 by Rep. Chaka Fattah [D, PA-2]. It has zero co-sponsors, hasn’t seen any movement in the legislative process, and is going nowhere. Yet there is suddenly a bit of buzz around it. It’s been creeping up the most-viewed bill list on OpenCongress and this week has been viewed more times than major bills like the Dodd-Frank financial reform bill, the House climate change bill, and the DISCLOSE Act. Most of the views are coming from search engines, presumably because of rumors that are circulating via email, like this one collected by Snopes.com:
While at the checkout of Wal-mart in Greenville, TN I heard that in the future the government may be planning to place a 1% tax on people using debit cards at the check out.
Rumors like this are based on a misunderstanding of what bills in Congress are. They do not necessarily represent the views of anybody in government besides the member of Congress who sponsored it and any members who have co-sponsored it. Congress is a diverse body of 535 members, all of whom can introduce any bill on any subject without having to seek anybody else’s consent. As a result, 10,000 or more bills are introduced each session. Only 4% of them ever become law, and somewhere between 85% and 90% each session die in the committee they were referred to upon introduction. As I’ve explained in the past, the vast majority of bills go nowhere.
That said, let’s take a quick look at what Rep. Fattah’s “Debt Free America Act” is, exactly. Here’s how it’s explained by the official CRS summary:
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.
It’s important to note that this is different from the financial transactions tax proposal supported by many economic reform groups. The typical financial transactions tax plan applies only to the kind of transactions that are traditionally associated with Wall Street — stuff like credit default swaps and derivatives contracts would be taxed upon being traded. But things like debit card purchases and direct employer deposits that would be taxed under Fattah’s bill would remain tax-free. The size of the tax would be lower as well. Most proposals call for a tax of about 0.25%. For an example of the more common kind of financial transactions tax proposal as a bill in Congress, see Rep. Peter DeFazio’s [D, OR-4] Let Wall Street Pay for the Restoration of Main Street Act of 2009.