[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3759 Introduced in House (IH)]







108th CONGRESS
  2d Session
                                H. R. 3759

To require a study on transforming America by reforming the Federal tax 
   code through elimination of all Federal taxes on individuals and 
corporations and replacing the Federal tax code with a transaction fee-
                             based system.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 3, 2004

  Mr. Fattah introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To require a study on transforming America by reforming the Federal tax 
   code through elimination of all Federal taxes on individuals and 
corporations and replacing the Federal tax code with a transaction fee-
                             based system.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Transform America Transaction Fee of 
2004''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) An effective stimulus plan meets the criteria of job 
        creation, fiscal responsibility, fairness, targeting of unmet 
        needs, tax reform and revenue sharing.
            (2) Economic viability is inexorably linked to the rate of 
        economic growth.
            (3) The current tax structure creates economic distortions 
        that limit growth and job creation.
            (4) The cost of compliance to taxpayers is five billion 
        hours and approximately $200 billion.
            (5) The tax code produces inefficiency in revenue raising 
        that forces the nation to struggle unnecessarily under the 
        burden of unequal and inadequate systems of public education 
        and health care, a crumbling physical and social services 
        infrastructure, and a crushing national debt.
            (6) Restructuring the tax code would promote economic 
        prosperity.
            (7) Replacing existing Federal taxes with a fee on 
        transactions eliminates systemic inefficiency that plagues the 
        current tax code.
            (8) Implementing a transaction fee would allow businesses 
        to undertake projects that were not profitable in the past and 
        workers would be more willing to supply labor than before.
            (9) Responsible tax reform is necessary for all to enjoy 
        financial security, economic prosperity, educational 
        opportunities, and affordable health care.
            (10) Therefore, it is necessary for the Department of the 
        Treasury to conduct a transaction fee and implementation 
        feasibility study to achieve these stated goals.

SEC. 3. STUDY ON THE IMPLEMENTATION OF A TRANSACTION FEE.

    (a) In General.--The Secretary of the Treasury shall conduct an in-
depth study on the implementation of a transaction tax in the United 
States. In particular, such study shall include a detailed feasibility 
and impact analysis of the proposal outlined in subsection (b) (as well 
as an implementation/action plan) to replace all existing Federal taxes 
with a per transaction fee based on the value of the transaction.
    (b) Transaction Tax Proposal.--
            (1) In general.--The fee under the proposal would apply to 
        all cash and non-cash transactions (including checks, credit 
        cards, transfers of stocks, bonds, and other financial 
        instruments).
            (2) Exclusions.--The fee would not apply to--
                    (A) cash transactions of less than $500, and
                    (B) salaries and wages by employers to employees.
            (3) Cash withdrawals from financial institutions.--The fee 
        under the proposal would apply to cash withdrawals from 
        financial institutions and be set at a rate that is either 
        double or higher than the standard transaction fee.
            (4) Fee rate.--
                    (A) In general.--The fee rate is set at a level 
                sufficient to generate revenues equal to revenues under 
                the Internal Revenue Code of 1986.
                    (B) Other potential uses of fee.--The fee rate 
                could be structured to cover 1 or more of the 
                following:
                            (i) A national debt reduction plan 
                        requiring elimination of the current national 
                        debt of $6.846 trillion over a period of 10 
                        years, with equal annual payments.
                            (ii) A Federal revenue sharing program 
                        providing funding to States to support 50% of 
                        the K-16 education costs of each State which 
                        agrees to adopt an equitable public school 
                        finance system.
                            (iii) A Federal program providing health 
                        care insurance coverage (for the current 
                        estimated 43 million uninsured Americans) which 
                        is comparable to the Federal employee benefit 
                        program or Medicare.
                            (iv) A Federal revenue sharing program 
                        supporting community and economic development 
                        investments in high poverty rural and urban 
                        areas at a level equal to 10% of current 
                        Federal tax revenues.
            (5) Progressivity.--The base standard transaction fee shall 
        not be greater than 1% for all noncash transactions under $500. 
        If more revenues are needed to meet the requirements of 
        paragraph (4), the Secretary of the Treasury would calculate 
        the minimum level of progressivity required to cover these 
        costs. This progressivity factor may include--
                    (A) a higher transaction fee for all transactions 
                above $500, and
                    (B) a progressive schedule of rates to tiered 
                ranges of transactions above $500.
            (6) General provisions.--
                    (A) Liability for fee.--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.
                    (B) Collection.--The fees will be collected by the 
                seller or financial institution servicing the 
                transaction.
    (c) Report of Study.--
            (1) In general.--The results of the study shall be 
        submitted to the Congress by the Secretary of the Treasury in a 
        comprehensive analytical report, detailing--
                    (A) the methodology employed in the calculation of 
                the fee rate,
                    (B) the factors considered in assessing feasibility 
                of the proposed revenue generating system and the 
                weight applied to each, and
                    (C) the portion of the transaction fee attributable 
                to each of the programs identified in paragraph (3)(B) 
                and the methodology used to calculate each.
            (2) Other requirements.--The study shall (in the following 
        order)--
                    (A) compute the fee needed to meet current revenue 
                generation,
                    (B) compute the fee needed to meet revenue 
                neutrality and generate additional revenue to support 
                the program described in paragraph (3)(B)(i) (relating 
                to national debt reduction plan),
                    (C) compute the fee needed to meet revenue 
                neutrality and generate additional revenue to support 
                all the programs described in paragraph (3)(B), and
                    (D) determine the utility of pegging changes in the 
                transaction fee schedule of rates to the rate of 
                inflation.
            (3) Comparative analysis.--The study shall include a 
        comparative analysis of the existing revenue-raising system 
        versus the proposed fee-based system on economic behavior. The 
        study shall include an analysis of effect of the 2 systems on--
                    (A) job creation,
                    (B) economic growth,
                    (C) consumption,
                    (D) investments, and
                    (E) savings levels.
            (4) Types of transactions.--The study shall include a 
        broad-based examination of all types and categories of 
        transactions, including information on frequency and value of 
        transactions in each category.
            (5) Impact of exemptions.--The study shall examine the 
        impact of the transaction fee exemption for all cash 
        transactions under $500.
            (6) Program operations.--The study shall provide 
        instructions on program operations, including--
                    (A) transaction fee collection,
                    (B) transaction fee implementation, and
                    (C) transaction fee compliance, enforcement, and 
                administrative costs.
            (7) Fee as tool of fiscal policy.--The study shall assess 
        the transaction fee as a tool of Federal fiscal policy, 
        including an impact analysis on the elimination or retention of 
        existing tax expenditures, incentives, penalties, and credits. 
        The study should also research and comment on options for 
        rebating citizens currently not subject to Federal income taxes 
        and/or other current aspects of the Federal tax code (i.e. the 
        earned income credit, the alternative minimum tax, and the 
        child tax credit).
            (8) Impact of fee by income levels.--The study shall 
        include an assessment of the impact of the transaction fee by 
        quartile income levels.
            (9) Implementation plan.--The study shall include a 
        detailed action plan on how best to implement a transaction tax 
        in the United States and shall include--
                    (A) information on timeline, agency reform, 
                potential pertinent regulatory issues, and type of 
                congressional action needed, and
                    (B) an examination of the feasibility of modifying 
                the overall mission and jurisdiction of the Internal 
                Revenue Service from one focused on tax law application 
                to one focused on uncovering and eliminating waste, 
                fraud, and abuse throughout the Federal Government.
    (d) Due Date.--The report of the study shall be submitted to the 
Congress not later than 1 year after enactment of this Act.
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