I 
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 corpora-
tions 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 Representa-
tives 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, tar-
geting of unmet needs, tax reform and revenue shar-
ing. 
(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 rev-
enue raising that forces the nation to struggle un-
necessarily under the burden of unequal and inad-
equate systems of public education and health care, 
a crumbling physical and social services infrastruc-
ture, 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 prof-
itable 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, edu-
cational opportunities, and affordable health care. 
(10) Therefore, it is necessary for the Depart-
ment 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 TRANS-
ACTION 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 anal-
ysis of the proposal outlined in subsection (b) (as well as 
an implementation/action plan) to replace all existing Fed-
eral 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—
each State which agrees to adopt an equi-
table 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 Medi-
care. 
(iv) A Federal revenue sharing pro-
gram 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 trans-
action 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 trans-
actions 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 ex-
ercises control over a piece of property or serv-
ice, regardless of the payment method. 
(B) COLLECTION.—The fees will be col-
lected by the seller or financial institution serv-
icing 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 cal-
culation of the fee rate, 
(B) the factors considered in assessing fea-
sibility of the proposed revenue generating sys-
tem and the weight applied to each, and 
(C) the portion of the transaction fee at-
tributable 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 cur-
rent revenue generation,
(B) compute the fee needed to meet rev-
enue 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 rev-
enue neutrality and generate additional revenue 
to support all the programs described in para-
graph (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 rev-
enue-raising system versus the proposed fee-based 
system on economic behavior. The study shall in-
clude 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 cat-
egory. 
(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, includ-
ing—
(A) transaction fee collection, 
(B) transaction fee implementation, and 
(C) transaction fee compliance, enforce-
ment, 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 expendi-
tures, incentives, penalties, and credits. The study 
should also research and comment on options for re-
bating citizens currently not subject to Federal in-
come taxes and/or other current aspects of the Fed-
eral tax code (i.e. the earned income credit, the al-
ternative 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 imple-
ment a transaction tax in the United States and 
shall include—
(A) information on timeline, agency re-
form, 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 uncov-
ering 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 en-
actment of this Act.
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