Dear Mr. Berko: I have been told by a well-connected lawyer friend that the Obama administration is proposing a 1 percent tax on all transactions to raise money for a bigger stimulus package and to increase social benefits.
I’m told that this 1 percent tax would apply to all financial transactions, ATM withdrawals, deposits made in a savings account, checks written to take out the money, debit card and credit card transactions, the purchase of a new car or a boat, and if ABC corporation buys out XYZ corporation for $2 billion, there would be a 1 percent tax of $20 million on that transaction. I think this may be true because my source is an attorney who provides legal opinions to one of the house subcommittees that is considering the bill.
I wrote you a very nasty letter recently when you commented that our churches should be taxed to provide government income. I apologize for that because if this new tax is in the works, it’s more insidious than taxing church property and income, especially since the 1 percent tax could be raised at will by the government like states raise their real estate taxes. I would appreciate your verification and comments. — R.R., Oklahoma City
Dear R.R.: I thought everybody knew about HR 4646, a fatwa introduced by Chaka Fattah, a Democratic congressman from Philadelphia, in February. Fattah, admittedly a “far left Democrat,” a Muslim and close associate of President Obama, was asked by the administration to sponsor this bill as a trial balloon. And since its introduction, this fatwa, or the Debt Free America Act, as the administration wants it called, has been referred to the House Ways and Means Subcommittee, the House Budget Subcommittee, the House Rules Subcommittee and the House Appropriations Subcommittee.
In short, HR 4646 imposes a 1 percent fee on every specified transaction, meaning “any transaction that uses a payment instrument, including any check, cash, credit card, transfer of stocks bonds or other financial instrument.” And the term “transaction” includes retail and wholesale sales, purchases of intermediate goods and financial and tangible transactions.
If this fatwa authored by Fattah gains traction, it will be presented to the voter as an alternative to the individual federal income tax. Supposedly, HR 4646 will by 2018 generate enough money to pay off the national debt and at that time replace the personal income tax.
It’s basically a value-added tax but with a punch like a sledgehammer blow to the lumbar spine of middle-class Americans. A man who sells his boat for $41,000 and deposits that check in his account would have to pay 1 percent on the $41,000 boat sale plus a 1 percent tax on his deposit in the bank. And if he uses that money to buy a car for $41,000, he would pay a 1 percent tax on the check he writes to the dealership plus a 1 percent tax for the purchase of a new Buick. That’s $1,640, which is probably one year’s worth of gas and oil. I agree with you; I think a tax on church income and property is a better idea.
Meanwhile, HR 4646 is not out of committee, and I suspect there may be some structural changes before it is presented to the House for a vote. But don’t make the mistake of selling HR 4646 short, as so many did with the health care bill.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at email@example.com.