“…all federal taxes would be abolished and replaced with a minimal fee…”

In the March/April issue, Robin Mejia (“Taxes Made Tolerable“) cited Mr. Bankman’s “Ready Return” program as an example of a proposed “huge improvement” to the “morass that is the U.S. tax system.” While I certainly applaud creative efforts to simplify our tax system, especially those efforts that benefit wage-earning taxpayers, I would like to call attention to my recently proposed tax plan, the Transform America Transaction Fee, which does even more to streamline and enhance revenue generation.

In this revolutionary plan, all federal taxes would be abolished and replaced with a minimal fee imposed on transactions over $500. Unlike consumption taxes, the transaction fee would apply to all transactions, not simply the sale of goods and services, and would therefore be a progressive tax. With the high volume of transactions regulated by the Federal Reserve, approximately $750 trillion annually, the tax base would be greatly expanded and allow for a minimal rate, as low as 0.4%, while still achieving revenue neutrality. Simply increasing the rate to 4 or 5% would provide increased funds for paying down the debt, investing in equitable education and supporting other necessary programs decimates under the current Administration.

In addition to greatly increasing the tax base (approximately 100 times the income tax base), the Transaction Fee will save taxpayers, small business owners in particular, from the costs of tax preparation and compliance. The nature of the Transaction Fee would also provide the flexibility necessary to adjust quickly for changes in the economy, as well as to support first time homebuyers, college tuition, or other favored economic transactions.

I thank you for your work in bringing to light innovative idea from across the political spectrum and hope that you will take a moment to explore this proposal as well. My website includes additional information, such as the testimony I gave before the House Ways and Means Select Revenue Measures Subcommittee. Please let me know if you have any question or if I can provide you with further information.

Very truly yours,

CHAKA FATTAH
Democrat, Pennsylvania’s Second Congressional District