Claim: The U.S. government is proposing a 1% tax on debit card usage and/or banking transactions.
Examples:[Collected via e-mail, July 2010]
While at the checkout of Wal-mart in Greeneville, TN I heard that in the future the government may be planning to place a 1% tax on people using debit cards at the check out.
I have heard discussion and seen on emails the fear that the Obama administration is going to pass a 'banking tax' that will take 1% of each deposit and 1% of every transaction out of a bank account.
Origins: Rumors about a 1% tax being slapped on the usage of debit cards and/or banking transactions are a reference to the Debt Free America Act (H.R. 4646). While there is such a bill before Congress, it has no backers other than its author and has about as much chance of passing as a snowball does of surviving hell.
Although the bill may be real, it's merely a proposal with no real support behind it, hence the "mixture" status shown above.
This Congressional bill, introduced by Representative Chaka Fattah of Pennsylvania, seeks to pay down the national debt and eliminate federal income tax on individuals by imposing a 1% fee on specified financial transactions:
One idea for raising taxes to pay down the debt is the bill introduced this February [2010] by Rep. Chaka Fattah (D-Pa.). His "Debt Free America Act" (H.R. 4646) 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. Theoretically, everyone would pay one cent on the dollar for every such transaction in America every day — whether $3 million on a $300 million business acquisition, $300 on the purchase of a $30,000 car, or $5 on a $500 ATM withdrawal.
Specifically, the text of the bill states that:
The purpose of [the transaction fee] is to establish a fee on most transactions. Such [a] fee:
is different than a sales tax in that a sales tax is charged only on sales to the final consumer, [while] the transaction fee would apply to intermediate users as well as end users
is different than a value added tax (VAT), commonly used in European and other countries, in that a VAT is imposed only on a portion of a transaction's value (roughly the difference between an item's selling price and its cost), [while] the transaction fee would apply to the entire amount of the transaction
is intended to raise sufficient revenue to eliminate the national debt, which was $10.6 trillion in January 2009, during a period of 7 years, and to phase out the income tax on individuals.
[This bill would] impose on every specified transaction a fee in an amount equal to 1 percent of the amount of such transaction.
The term 'specified transaction' means any transaction that uses a payment instrument, including any check, cash, credit card, transfer of stock, bonds, or other financial instrument.
The term 'transaction' includes retail and wholesale sales, purchases of intermediate goods, and financial and intangible transactions.
Persons become liable for the fee at the moment the person exercises control over a piece of property or service, regardless of the payment method.
(The bill provides for individuals earning $125,000 or less to receive a credit equal to 1% of their income against the tax, and it gives the Treasury Department discretion to exempt certain transactions on which lower-income people disproportionately rely.)
The Debt Free America Act was introduced to Congress on 23 February 2010. It was immediately referred to committee and has no co-sponsors, so the chances that it will ever be voted upon, much less passed into law, are practically nil.
Last updated: 27 July 2010
The URL for this page is http://www.snopes.com/politics/taxes/debtfree.asp
