WASHINGTON, June 17, 2013 /PRNewswire-USNewswire/ -- Congressman Chaka Fattah (D-PA), a Senior Member on the House Appropriations Committee has introduced legislation, the American Growth & Tax Reform Act of 2013, which directs the Treasury Department to issue a legislative proposal to Congress concerning the viability of replacing the current income tax with a consumption tax.
In comparison to the income tax, a consumption tax would place a levy on money spent on goods and services. It would expand the tax base by capturing money spent by all segments of society--individuals, corporations, the rich and the poor. A consumption tax will do what the current tax code can't: reduce the number of tax evaders by placing a tax on transactions as opposed to income.
"A consumption tax will accomplish meaningful tax reform while simultaneously stimulating economic growth," said Fattah. "This will be done by broadening the tax base and allowing for an increase in personal savings." Under a consumption tax, personal savings are excluded from the taxable base and the savings would encourage economic growth and help stabilize the economy.
Under H.R. 2393, the Secretary of the Treasury would clarify how the consumption tax would be used to identify and grab hold of ambiguous revenue which would help in reducing the deficit. The bill also asks Treasury to determine if the consumption tax should be applied in phases: implementing it with the current income tax to reduce the deficit and later eliminating all income and business taxes.
This is not Congressman Fattah's first attempt at overhauling the tax code. In the summer 2010 edition of the Harvard Law Review, Fattah authored an essay on the feasibility of implementing a one percent fee on all financial transactions.
Implementing a consumption tax will simplify the current cumbersome system and eliminate the use of tax shelters and curb tax evasion.
SOURCE Office of Congressman Chaka Fattah