Debt Free America Act Would Switch U.S. from Income Tax to Consumption Tax

Rep. Chaka Fattah, a Pennsylvania Democrat, has introduced a bill — the Debt Free America Act — in every Congress since at least 2004 that would convert the United States’ primary source of tax revenue from income to consumption — which is the tax system deployed by most industrialized economies. Rep. Fattah says the switch would “wipe out the national debt within seven years and then fund the federal government while abolishing personal income taxes.”

Everyone would pay one cent on the dollar for every such transaction in America every day — whether $3 million on a $300 million business acquisition, $300 on the purchase of a $30,000 car, or $5 on a $500 ATM withdrawal

Here’s how he describes the system:

Under the Debt Free America Act, the 1 percent fee on transactions in the United States would be directed to eliminating America’s national debt that existed on January 20, 2009 — about $10 trillion — and reducing the deficit. Once that debt is paid off, over the next seven years, the fee’s proceeds would be directed to broad-based tax reform to include elimination of personal income taxes.

Taxpayers earning $125,000 (or $250,000 for those filing jointly) would receive a year’s-end 1 percent credit on their income, eliminating the impact of the transaction fee on middle class and low income Americans. In addition, my bill provides statutory authority for the Bipartisan Task Force for Responsible Fiscal Action to control and limit federal spending, recently established by President Obama by executive order.

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Debt Ceiling Has Been Raised 74 Times Since 1962

74

Number of times the debt ceiling has been raised since 1962 — 10 times [PDF, p. 20] in the last decade, usually with the votes of Republican leaders, including today’s House Speaker John Boehner, House Majority Leader/tea bagger Eric Cantor and Senate Minority Leader Mitch McConnell — all of which is more evidence that the current controversy about raising the debt ceiling is just bogus politicizing of a non-issue by right-wing extremists who want the government to fail.

Bush Raised Debt Ceiling Five Times – With Votes from GOP Leaders Boehner, Cantor and McConnell Every Time

As you listen to Republican rhetoric on raising the debt ceiling, keep these facts in mind about their record as stewards of the economy during the Bush years when they controlled the White House, Congress and the courts: They gave billions in tax breaks to wealthy Americans (which, the record shows, did not spur job growth), put two wars on the national credit card (it’s a pleasure doing business with you, Chinese commies!) and rammed through an unfunded Medicare benefit. Remember all that? Now read this excerpt from a report from Think Progress in April:

Bush increased the debt to $9.815 trillion by the end of his term, with plenty of help from the four Republicans currently holding Congressional leadership positions.

At the beginning of the Bush presidency, the United States debt limit was $5.95 trillion. Despite promises that he would pay off the debt in 10 years, Bush increased the debt to $9.815 trillion by the end of his term, with plenty of help from the four Republicans currently holding Congressional leadership positions: Speaker John Boehner, House Majority Leader Eric Cantor, Senate Minority Leader Mitch McConnell, and Senate Minority Whip Jon Kyl. ThinkProgress compiled a breakdown of the five debt limit increases that took place during the Bush presidency and how the four Republican leaders voted:

June 2002: [Republican-controlled] Congress approves a $450 billion increase, raising the debt limit to $6.4 trillion. McConnell, Boehner, and Cantor vote “yea”, Kyl votes “nay.”

May 2003: [Republican-controlled] Congress approves a $900 billion increase, raising the debt limit to $7.384 trillion. All four approve.

November 2004: [Republican-controlled] Congress approves an $800 billion increase, raising the debt limit to $8.1 trillion. All four approve.

March 2006: [Republican-controlled] Congress approves a $781 billion increase, raising the debt limit to $8.965 trillion. All four approve.

September 2007: [Democratic-controlled] Congress approves an $850 billion increase, raising the debt limit to $9.815 trillion. All four approve.

Reagan to Senate Leader on Debt Ceiling in 1983: Default Would Lead to ‘Incalculable Damage’

art-letter-reagan-debt-ceilingToday’s Republicans give lip service to Ronald Reagan as if he were the paragon of tea party conservatism, but they conveniently ignore his actual record, particularly the fact that, as president, he raised taxes at least seven times, including the largest corporate tax in history, and, as governor of California, one of his first acts was to raise state taxes by $1 billion, which is roughly $6.5 billion today.

No doubt these same Republicans will also ignore the fact that, in 1983, Pres. Reagan strongly advocated raising the debt ceiling when the United States was undergoing an economic crisis similar to the one facing the country today. Back then, in a letter [PDF]to Senate Majority Leader Howard Baker, R-Tenn., Reagan wrote:

Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the costs, the disruptions and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns.

The reason that Republicans, particularly the tea baggers, ignore Reagan’s actual record is because facts don’t matter, especially if the facts get in the way of their prime objective: doing whatever it takes, including blowing up the world’s financial markets, in order to ensure that Mitt Romney is the next president of the United States.

The text of Reagan’s letter to Baker, urging him to support the vote in Congress is transcribed in full below.

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Cause and Effect? Dow Drops 280 Points 24 Hours after House GOP Votes Against Raising Debt Ceiling

Imagine the firestorm that would be raging on Republican propaganda outlets right now if the stock market had dropped 2.2 percent within 24 hours after Democrats had voted unanimously not to raise the nation’s debt ceiling.

The entire right-wing noise machine — from Fox & Friends to Limbaugh, from Hannity to O’Reilly — would be singing the same refrain: The stock market has sent a clear message of disapproval over the Democrats’ irresponsible vote. Whether that assertion was true would not matter. They would make it true simply by unanimously agreeing that it was.

But because it was Republicans who voted irresponsibly, right-wing media sees no relationship between the vote and market drop.

And, of course, neither does the “liberal” lamestream corporate inside-the-Beltway media.

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GOP’s Ryan Budget Would Add Up to $6 Trillion to Debt – And Yet GOP Won’t Raise Debt Limit?

In what Democrats called a political stunt, House Republicans voted in lockstep to oppose raising the U.S. debt ceiling last night.

“Let’s just increase the debt limit by the amount of debt it would take to accommodate Paul Ryan’s budget in the next decade. We can fight about the details later. No spooking the markets over this insanity.”
– What Pres. Obama should suggest to the GOP, according Matt Miller

Republican have done a masterful spin job on the debt-ceiling issue. Polls show that a majority of Americans say they oppose raising it, but it appears they have reached this conclusion based on misperception of the facts.

For one thing, raising the debt limit has nothing to do with future spending. It covers the indebtedness incurred in the current budget, the same budget that Congress — including the Republicans in the House — voted for.

That’s right. Republicans voted to raise the national debt a few months ago, now these same Republicans are demanding that the U.S. Treasury welch on the debt they charged to the national credit card.

Worse, not only have Republicans snookered the public into believe that raising the debt ceiling is tied to future spending, the GOP’s own budget for future spending — the budget bill that includes the the Ryan “Kill Medicare” proposal, the budget that Republicans in the House and Senate vote for — would raise the national debt by as much as $6 trillion.

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