Article

2010-08-30 Economy

H.R. 4646 - The proposed Transaction Tax

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Posted by Besoeker 2010-08-30 00:00|| || Front Page|| [1 views ] Top

#1 Hmm. If true, the Zero regime apparently wants to force a repeat of the 1933 run on the banks. It's difficult (though not impossible) to believe even Dem voters wouldn't notice the blatant robbery. And this on top of the upcoming expiration of the Bush tax cuts.

Posted by PBMcL 2010-08-30 00:36|| 2010-08-30 00:36|| Front Page Top

#2 Like drug addicts who steal to keep their habit going.

Posted by Procopius2k 2010-08-30 01:12|| 2010-08-30 01:12|| Front Page Top

#3 Besoeker, I don't think that's an accurate description of the bill. There is nothing about taxing a person's income, or taxing movements between his accounts. The reason for taxing atm withdrawls is the resulting cash would be used to buy something.

This is like a sales tax, except it's levied on all transactions, not just the final retail transaction.

Also, there is a 1% non-refundable credit for people earning less than 100K. Because this is non-refundable, the proposed transfer fee is highly regressive, unlike Fair Tax or Flat Tax.

Stock and option transfers are excluded. HFT continues! Mustn't hobble Goldman Sachs and the PPC....

The proceeds go into a trust fund to pay down the debt. The intent is to eliminate the income tax once the debt is paid off.

Here's the text:

H.R. 4646

Here's some analysis.

I have difficulty believing that a 1% transfer tax would generate enough revenue to pay down the national debt in seven years. But maybe so.

Posted by KBK 2010-08-30 01:35|| 2010-08-30 01:35|| Front Page Top

#4 Barter time!
With no receipts.

Posted by Water Modem 2010-08-30 01:48|| 2010-08-30 01:48|| Front Page Top

#5 The proceeds go into a trust fund to pay down the debt. The intent is to eliminate the income tax once the debt is paid off.

And my gasoline tax is supposed to pay to pave the roads.

And my property tax is supposed to pay for my schools.

And various "funds" aren't fungible.

You watch. The pols will figure that since this "fund" would be paying down the debt that they can ease up on other austerity measures and go right back to business as usual. Then, of course, some pol will come up with the bright idea to use this money for Social Security come the next election cycle.

Posted by gorb 2010-08-30 01:57|| 2010-08-30 01:57|| Front Page Top

#6 Yup.

Posted by KBK 2010-08-30 02:13|| 2010-08-30 02:13|| Front Page Top

#7 The intent is to eliminate the income tax once the debt is paid off.

Yeah like that'll happen. The income tax was sold as a 1% tax that would never need to increase.

Posted by gromky 2010-08-30 05:33|| 2010-08-30 05:33|| Front Page Top

#8 Use your ATM Card and Buy:
Gas - $40.00 x .01 = .40
Groceries - $300.00 x .01 = $3.00
Suit/Clothes, mens - $400.00 x .01 = $4.00
----
Use a Check and Buy:
Home Appliance - $1000.00 x .01 = $10.00
Automobile - $20,000 x .01 = $200.00
House - $200,000 x .01 = $2000.00
---
Withdrawal from your retirement account monthly:
$2000.00 = $20.00 x 12 = $240.00 annually.

Pay your mortgage:
$1500.00 = $15.00 x 12 = $180.00 annually
Pay your property tax:
$3500.00 = $35.00 annually

Write the IRS a check to pay your taxes:
$3000.00 = $30.00

Broke yet?

Posted by Goodluck 2010-08-30 06:57|| 2010-08-30 06:57|| Front Page Top

#9 For the average person, 1% becomes 2% very quickly.

Your employer pays you -- let's say your net is $4,000 a month.

Direct deposit -- costs you $40.

Now you write checks to cover the mortgage, etc. Every check costs 1% of the amount. Write $4,000 worth of checks to pay the bills, and that's another $40.

You were just taxed $80, or 2% of your take-home. They get you coming and going.

Posted by Steve White 2010-08-30 09:22|| 2010-08-30 09:22|| Front Page Top

#10 First step toward VAT. It's coming.

Related to this, albeit vastly more significant, has been the transfer-in-plain-view of trillions of dollars from savers to the banksters, who are not lending any of the trillions back to businesses or consumers.

The banksters now have enormous spreads with which to bolster their balance sheets and profit margins. And the rest of us have mass unemployment, absurdly high loan rates and absurdly low savings rates, and a joke of an insider-manipulated stock market.

The spread between what the banksters receive and what they pay reflects a deliberate Obama admin policy. Feature, not bug. No fix in sight.

Posted by lex 2010-08-30 09:56|| 2010-08-30 09:56|| Front Page Top

#11 Well, first there was the trillion-dollar Stimulus plan and unemployment continues to rise. Then there was Obamacare that resulted in the skyrocketing cost of Health Insurance premiums. And, of course, there was the Financial overhaul legislation that didnt address Fannie or Freddie and actually institutionalized Too big to fail. Oh, and dont forget the Consumer protection law that has driven up interest rates and dried up credit for the average consumer. But Im sure there wont be any unintended consequences with this one.

Posted by DepotGuy 2010-08-30 10:21|| 2010-08-30 10:21|| Front Page Top

#12 Well, if they try this the cash only business will boom.

More and more I get the feeling that the dhimocrats are in full panic mode and they are pushing everything and going for broke since they know they will be a minority for a while.

Posted by DarthVader 2010-08-30 11:03|| 2010-08-30 11:03|| Front Page Top

#13 KBK's comment is naive. The bill leaves loopholes large enough to fly the Hindenburg through. Language as loose as this leave sit wide open to tax every single financial transaction, including account transfers and deposits.

We have a supreme court that has decided that it is perfectly constitutional to force the sale of private property to another private entity, that growing feedstocks for your own use is interstate commerce, federal courts that have decided you don't have a right to privacy in your own yard unless it is fenced. The IRS says forgiven debt is income. How much proof do you need that the bill will provide the cover for the government to do whatever it wants with any and transactions/ The last I looked a transfer from my bank account to pay a credit card bill was a transaction.
The bill defines "transaction" to include retail and wholesale sales, purchases of intermediate goods, and financial and intangible transactions.

Posted by Glong Gonque3052 2010-08-30 11:04|| 2010-08-30 11:04|| Front Page Top

#14 I don't believe the transaction fee covers income receipt or tax payments:

(2) TRANSACTION- The term `transaction' includes retail and wholesale sales, purchases of intermediate goods, and financial and intangible transactions.

It's like a VAT in that it covers internal transactions, but it's on the whole amount, not just the value added.

Home Depot buys a drill from Ryobi for $40: tax is forty cents. You buy the drill from Home Depot for $140, tax is $1.40. This would have some interesting ramifications when companies try to structure themselves to avoid transactions between subsidiaries. Seems simpler than a VAT, but probably less workable in practice.

Like a VAT, this throws a lot of sand into the gears of commerce, most of it unseen by the consumer. But the consumer will surely feel the effect.

One more program focused on taxing instead of spending reduction.

I can't imagine why this isn't refundible. The 40% who pay no income taxes get nothing back.

My link to the bill's text turned out to be a temporary cgi call. Try this.

Posted by KBK 2010-08-30 11:10|| 2010-08-30 11:10|| Front Page Top

#15 ~~Like~~ Unlike a VAT, this throws a lot of sand into the gears of commerce, most of it unseen by the consumer. But the consumer will surely feel the effect.

VAT has minimal impact on business and is cheap and easy to administer.

When Canada introduced a VAT (called a GST) 90% of businesses that were exempt, voluntarily collected and paid the tax.

Posted by phil_b 2010-08-30 11:40|| 2010-08-30 11:40|| Front Page Top

#16 We'll all have to go back to stuffing our cash under the mattress. How long do you think it will be before banks notice that people aren't using their ATM cards or writing checks anymore? They've got you though. You'll still have to have a checking account so you can get your paycheck cashed. But then you just stuff all the cash in your pocket. It might make things simpler. You won't have to worry about balancing your checking account. You'll know you can keep spending as long as there is money in your pocket. But when the money in your pocket starts running low then you slow the spending. Have to carry a pistol to keep the bandits at bay.

Posted by Ebbang Uluque6305 2010-08-30 12:02|| 2010-08-30 12:02|| Front Page Top

#17 This little 1% tax will push a lot of people over to a cash basis, then come the 10% contractor "cash discounts" (i.e.: it goes unreported and therefore completely untaxed) and it won't be long before that 1% ends up saving me more money than it costs me.

I might be for this tax ....

Posted by gorb 2010-08-30 12:16|| 2010-08-30 12:16|| Front Page Top

#18 These &^%$#*@ don't realize you can't tax your way out of a deep recession? Only the most idiot lamebrain would think that.

NOT ONLY "NO BUT HELL NO!"

Posted by JohnQC 2010-08-30 12:20|| 2010-08-30 12:20|| Front Page Top

#19 VAT has minimal impact on business

This "fee" and a VAT are very similar. The rate is lower on the "fee" because it's on the whole amount.

Either way, the cost is passed invisibly to the consumer. Little political backlash.

You'll still have to have a checking account so you can get your paycheck cashed.

I believe you'll be charged the 1% as soon as you convert to cash, whether atm or teller window.

Posted by KBK 2010-08-30 12:45|| 2010-08-30 12:45|| Front Page Top

#20 Hmmm... sounds a lot like a previous act that involved requiring stamps on all official documents, and charged a relatively high fee for that stamps -- when you could even get them.

Posted by Rob Crawford 2010-08-30 13:10|| 2010-08-30 13:10|| Front Page Top

#21 Hmm. Introduced by a minority-majority district congresscritter, absolutely no co-sponsors. I'm guessing this is dead on arrival, unless it gets adopted by opinion-leaders.

Call it the UnFair Tax.

Posted by Mitch H. 2010-08-30 14:48|| http://blogfonte.blogspot.com/ 2010-08-30 14:48|| Front Page Top

#22 So I gots a question, how does effect companies who's business model is based on TRANSACTIONS? Western Union for the obvious example, but also there are quite a few companies that do hundreds of thousands to millions of dollars everyday between banks, other companies, and even individuals. Does this mean they got to pay a transaction fee too? Does this mean banks have to collect a transaction fee everytime they conduct a wire transfer between companies? I can't imagine any organization thats trying to do a million dollar plus loan agreeing to getting 1% of it taxed out by the government.

Posted by Valentine 2010-08-30 15:04|| 2010-08-30 15:04|| Front Page Top

#23 I'm not necessarily opposed to a VAT-- in view of all the other options available to us, it's probably the least bad. But it has to be sold transparently to the people, as in, "Yes, this $ucks, but so does every other option, and it would be foolish to gut spending or raise income or corporate taxes right now."

Posted by lex 2010-08-30 16:25|| 2010-08-30 16:25|| Front Page Top

#24 > VAT has minimal impact on business and is cheap and easy to administer.

I don't often say this, but you'd have to be mentally ill to believe that.

If VAT had no impact on business, then they could quite happily collect the VAT privately at a massive profit through higher customer charges.

Truly mental.

Posted by Bright Pebbles 2010-08-30 17:28|| 2010-08-30 17:28|| Front Page Top

#25 "The proceeds go into a trust fund to pay down the debt."

Uh-huh. Just like the Social Security "lockbox."

We all know how that turned out....

Posted by Barbara Skolaut 2010-08-30 21:32|| 2010-08-30 21:32|| Front Page Top

#26 If VAT had no impact on business, then they could quite happily collect the VAT privately at a massive profit through higher customer charges.

Posted by phil_b 2010-08-30 21:39|| 2010-08-30 21:39|| Front Page Top

#27 If VAT had no impact on business, then they could quite happily collect the VAT privately at a massive profit through higher customer charges.

My VAT (GST) return used to take me about 20 minutes to do, and that was manually calculating it.

Add up the VAT you paid, subtract it from the VAT you collected, remit the balance.

No need for accountants, tax advisers or any other high costs associated with the usual government tax complexity.

VAT costs the consumer far less than any other revenue equivalent tax, precisely because it is so cheap to administer.

Otherwise, taxing financial transactions is idiotic. A throwback to the 19th century.

What is happening is that governments in the USA and elsewhere are starting to panic about falling tax revenues and are dreaming up new taxes. Often from the, lets say, economically challeged.

Posted by phil_b 2010-08-30 21:53|| 2010-08-30 21:53|| Front Page Top

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