Thursday, October 28, 2010

Debt Free America or Overtaxed, Broke Citizens?

Elections are just days away and the outcome is favorable for Conservatives. My concern is what will the mad-as-heck Dems do in the following weeks, before they actually receive their pink slips.

I am disturbed by HR 4646, or the so called Debt Free America Act introduced by Representative Chaka Fattah (D-Pa) on Feb 23, 2010. It stipulates that Congress must reconvene no later than November 23, 2010 and vote on it by December 23.

Debt Free America sounds great doesn't it? Don't get too excited, I hope this doesn't ever get out of the committee and onto the House floor. Check out the facts, read the bill and contact your representatives.

This ingenious bill could put us debt free by 2017 according to its sponsor. Basically what will happen is every penny you put into the bank will have a 1% surcharge sent directly to the US Treasury. 
Example: Deposit $5,000 into a checking or savings account you are charged $50. 
Withdraw that same $5,000 you pay another $50, that is $100. 
Don't be fooled and say you will deal with cash only. You will still be charged 1% on ALL purchases you make, no matter what source of funds you pay with. My understanding is: 
  • Deposit your money in the bank - pay a charge
  • Withdraw your money - pay a charge
  • Pay cash for merchandise - pay a charge
  • Use your credit/debit card - pay a charge
  • Write a check - pay a charge
If you own a business you are responsible for adding the surcharge to the total bill and turning it over the Dept. of Treasury. When you deposit your income, you will be charged on the amount you deposit, the cycle just keeps going and going. Businesses will certainly have to spend more money to update their computer systems to comply with this and even hire people to take care of the additional work. Guess what not only will be paying a charge, but retail prices will surely go up.

(b) Purposes- The purpose of section 3 of this Act is to establish a fee on most transactions. Such fee--
  1.  is different than a sales tax in that a sales tax is charged only on sales to the final consumer and the transaction fee would apply to intermediate users as well as end users,
  2. is different than a value added tax (VAT), commonly used in European and other countries, in that a VAT is imposed only on a portion of a transaction’s value (roughly the difference between an item’s selling price and it’s cost) and the transaction fee would apply to the entire amount of the transaction, and
  3. is intended to raise sufficient revenue to eliminate the national debt, which was $10.6 trillion in January 2009 {much higher now}, during a period of 7 years and to phase out the income tax on individuals.
Sounds like it could work, think again, during the 7 years it will take to eliminate our national debt, you will be paying Uncle Sam your usual IRS taxes. Now for paying taxes twice you will receive a tax credit of 1% of your adjusted gross income.

All this extra income going to our federal government is supposed to be used to repay our national debt. That base is covered too:
  • SEC. 7. PRIORITIZATION FOR REPAYMENT OF NATIONAL DEBT. To take into account the national security concerns of the United States, the Secretary of the Treasury, in consultation with the Secretary of State, shall prioritize the repayment of the national debt and shall take into account circumstances in which the Secretary of the Treasury determines the early repayment of outstanding debt is detrimental to the fiscal stability of the United States.
In other words there is no guarantee the debt will be paid off, meanwhile for 7 years we pay twice to four times on our income. At the end of 7 years Income Tax will supposedly be eliminated. Currently we are facing losing all the Bush Tax Breaks, and they want to add more taxes on us. At the end of 7 years when our country is "debt free" there are plans to assist the personnel of the IRS in the transition, that money comes from the charges we paid. 1% doesn't sound like much, but once the bill is enacted the rate can be raised.

I am not a legal attorney, but from reading this bill these are my interpretations, 
I would like to hear yours.

Tea Party Deanie