As we look at the $13 Trillion debt hole and ponder any chance at future prosperity, many solutions have entered the public discourse. One in particular — a transaction tax — has recently jumped back into the spotlight as Germany and France are proposing to push an EU-wide tax on all transactions. Before we make any reckless decisions in the US, we must include some critical stipulations if any transaction tax is to provide more benefit than pain.
The Hill explains the US proposed taxation:
In February, Rep. Chaka Fattah (D-Pa.) [submitted the] “Debt Free America Act” (H.R. 4646) that would impose a 1 percent “transaction tax” on every financial transaction — whether paid by cash, credit card or any form of financial transfer, the only exception being transactions involving the purchase or sale of stock … [and] a 1 percent tax credit for couples earning $250,000 or less ($125,000 or less for individuals) and discretion by the Treasury Department to exempt certain transactions on which lower-income people disproportionately rely.
There are 3 critical restrictions which must be added to this bill in order to protect us from future fiscal disasters:
1. The Money Must be Restricted to Paying Down the National Debt
We all know politicians will spend this money like Paris Hilton if it’s simply another hose from our pockets to their districts. Therefore, the single biggest rule which must accompany any transaction tax must be an ironclad limitation to use these tax dollars strictly for paying down the national debt. No exceptions. None.
2. The Tax Must Terminate
Taking back magic pixy dust (i.e., cash) from Washington is like ripping a pacifier from a newborn babe’s mouth. So, the second most important rule which must accompany a transaction tax must be a termination clause stating the tax will be abolished when the national debt reaches a certain manageable threshold. This clause should also include a stipulation to prevent Washington from running up the debt while simultaneously paying it down.
3. The Tax Must Not Hamper Economic Growth
Notice I did not say, “limit economic growth.” Obviously, every tax is a dollar which could have otherwise been spent in the economy. In the case of paying down the debt, it is an investment in the future and penalty on those who benefited from the debt. More accurately, it is the same first step every personal finance guru preaches: pay off your debt so you can prosper! The longer we wait, the less the younger generations will be inclined to pay the national credit card bills of their elders.
Tell Your Representative
If any of these three restrictions are not included in the proposed transaction tax legislation, we must firmly reject the bill in order to guarantee our conflicted politicians and crony corporations do not simply turn a remedial measure into another honey covered time bomb. If you are concerned about keeping new taxes in check with sound oversight, let your representative know here.
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