Lawmaker calls for creation of transaction tax

Rep. Chaka Fattah (D-Penn.) on Thursday called for President Obama's debt commission to condider legislation that would tax all transactions to help reduce the country's growing deficit and $12.8 trillion debt. 

Obama's Bipartisan National Commission on Fiscal Responsibility and Reform will begin discussions next week on ways to stem the tide of red ink in Washington.

Fattah has introduced legislation imposing a 1 percent tax on all transactions, retail and financial, except stock sales. The tax would be broadly applied to any transaction involving cash, check or credit card, and would replace existing federal taxes on individuals and businesses. 

Fattah argues by including a wide range of transactions in the tax, the levy could be relatively small and still be effective in balancing governmental coffers.  

"By expanding the base of revenue collection to the broadest possible level, the percentage fee could be reduced to a near miniscule amount," the congressman stated in a letter to the debt panel.

"According to estimates from the Federal Reserve, the annual volume of transactions in the U.S. economy in 2008 was approximately $755 trillion. Raising revenue to cover the roughly $2.6 trillion federal budget would require a transaction fee on all transactions of up to one percent."

Obama's debt panel is expected to make legislative suggestions to Congress on ways to balance its budget. However, Ways and Means Chairman Sandy Levin (D-Mich.) recently told an audience at the National Press Club that he did not expect to create a tax similar to the one advocated by Fattah.

"I don't think a financial transaction tax is likely to be accepted," he said.