House Appropriator Offers Super Committee Debt Free Proposal

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Nov 01, 2011, 03:10 ET

Congressman Chaka Fattah provides committee with deficit plan alternative.

WASHINGTON, Nov. 1, 2011 /PRNewswire-USNewswire/ -- Members of the House received a copy of the letter Congressman Chaka Fattah (D-PA) sent to members of the Joint Select Committee on Deficit Reduction asking that in their deliberations they consider his bold new plan that would raise enough revenue to pay off the nation's debt.

In the letter addressed to Members of the Super Committee, Fattah wrote that his Debt Free America strategy offers a unique revenue opportunity and ambitious strategy that will eliminate the National Debt. He asks for comprehensive review and maintains that adoption of this innovative approach will result in a debt free nation that has only a nominal impact on the average citizen.

Congressman Fattah has introduced the Debt Free America Act, H.R. 1125, for consideration in the current Congress.

Below is a copy of Fattah's letter to the Super Committee that he sent today to his colleagues:

As you are engaged in the difficult work of addressing the nation's fiscal circumstances, I would like to offer you a proposal I have been developing for the past few years. This "Debt Free America" strategy differs from much of what has already been said in that it is both a unique revenue opportunity and ambitious strategy to eliminate, rather than slow the growth of, the National Debt.

While most revenue proposals under public consideration have focused on the income tax rate and exemptions, I believe it is appropriate that the Federal government consider a consumption tax similar to those imposed by almost every large economy in the world. My proposal differs from the traditional Value Added Tax (VAT) approach; instead this new consumption fee would be uniquely American and is designed to fit our own economy. This proposal, in addition to its potential to raise sufficient revenue to eliminate the National Debt, could also serve as the basis for the broader tax reform that members of the Joint Select Committee on Deficit Reduction have mentioned undertaking.

I appreciate your attention to this proposal. I am happy to answer any questions or supply additional information. Please find attached a summary of the proposal, as well as supporting information for a related bill I introduced earlier this Congress.

Very truly yours,

Chaka Fattah

Member of Congress

Committee Members have until November 23 to finalize on a plan to find at least $1.2 trillion in deficit savings over the next ten years or face automatic spending cuts that would dramatically impact the Department of Defense.

Included with the letter is information outlining how Fattah's Debt Free would be implemented:

Summary of Debt Free America Proposal*

Congressman Chaka Fattah (PA-02)

American Consumption Fee

A nominal fee on transactions substantially facilitated by an effective federal government

Apply an American Consumption Fee to all transactions, except those between or terminating in personal accounts.

Even with a rate as low as 0.5%, sufficient revenue would be generated to pay down the national debt.
Do not apply the fee to stock transactions or other financial products until there are international agreements.
Dedicate all revenues generated by this fee to paying off the National Debt.

Rationale

The existence of an effective federal government allows a substantial number of transactions to take place in our economy. The absence of an effective federal government would make these transactions unlikely.
Current proposals, Simpson-Bowles Commission, Rivlin-Domenici Commission, Chairman Ryan, as examples, achieve, at best, a National Debt that is $10 trillion higher than the current National Debt.
Given the fragile nature of the American economy, as described recently by the IMF, and challenges to American global leadership, the Joint Select Committee should consider aggressive new revenue options to pay off the National Debt.
As a great nation, we can pay down our debt.
Economists agree that a consumption fee or tax is the most efficient way to raise revenue.
Every major economy with which the United States competes funds their government with a consumption fee or tax.
A VAT would not work well in the American economy, the United States needs a uniquely American consumption fee system.