UPDATE 07-09-10:
(Original Story follows this update)

After further examination of the Debt Free America Act, SHTF Plan contributor Sketch rightly pointed out that the proposed legislation currently in Congress would move to eliminate the income tax as we know it today. Under Section 6 of the bill, implementation of a 1% transaction tax would repeal the income tax on individuals currently allowed under certain sections of the Internal Revenue Code of 1986.

Forgive our skepticism on this, but if this bill were to ever come to fruition, we expect it to end up similar to the watered down version of the Audit the Fed Bill which was recently passed. The passing of this bill, you’ll recall, included a last minute modification to the actual auditing of the Federal Reserve, essentially leaving the bill impotent.

At this point, we would like to see bipartisan review and spirited debate in both chambers to determine if this is a realistic proposal.

As pointed out in the comments section below, perhaps this is exactly the type of system of taxation that we should implement, especially if the income tax itself is repealed, as it would ‘punish’ spenders and ‘reward’ savers.

ORIGINAL STORY PUBLISHED 07-08-2010:
ORIGINAL STORY TITLE: “We Want More: Congress Looks to Tax ATM Withdrawals, All Financial Transactions”

We’ve written repeatedly about the debt problems faced by America today and for generations to come. We’ve also noted that when government bureaucrats overspend, the solution is always to tax the people, rather than to cut back the spending. And we predicted, like many others, that everything is fair game for the government and they will stop at nothing to get their hands on everything they can.

A recent story at Check It News directed us to an overview of a new bill introduced in the House of Representatives (H.R. 4646) that would tax every single financial transaction in the country:

One idea for raising taxes to pay down the debt is the bill introduced this February 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.

source: Lanny Davis Op-Ed

To be fair, Lanny Davis also mentioned that taxing every transaction is only part of the solution, and that cutting spending would be an important part of any strategy to pay off our national debt.

We agree that cutting spending is a great idea, and if federal, state and local governments want to eliminate debt, then this is the first step that needs to be taken.

There should be no talk of increasing taxes, even 1%, without a commitment from Congress on spending cuts first.

Given that “spending cuts” have been the talking point of every election since most of us have been alive, we’d like Congress to put that in writing, in the form of bills, essentially mandates, that will force cuts in wasteful programs and move to eliminate entitlement programs like welfare, social security, medicare, medicaid, and the newly passed Obamacare legislation.

Without a move to scale down and eliminate most of these programs, Congress could collect a 100% tax on all Americans, seize all of the wealth in the USA and we would still owe $50 trillion to our creditors over the next 30 years.

Tax increases will not work so long as our Legislative branch is populated with power hungry sociopaths who care only about their personal advancement within the political ranks of their parties.

How do these people even come up with these numbers knowing full well that our national commitment is officially $120 trillion over the next few decades? A 1% tax is going to fix that?

A 5th grader with a calculator could tell you this won’t work unless the outrageous spending is halted.

The next thing you know, they’ll want to tax us for breathing. Oh, wait. Too late. Congress will be attempting to pass this legislation, formerly known as the Cap & Trade, under a new name, the American Power Act, either this year or next, essentially taxing you for the toxic carbon dioxide you exhale.