I was pleased to discover that in the new session of Congress, the idea was proposed again on the 16th of March 2011 - with a new number this time. Now it's called H.R. 1125. You can find about it here or by going to Chaka Fattah's own site.
Here's the summary
Debt Free America Act - States as purposes of this Act the raising of sufficient revenue from a fee on transactions to: (1) eliminate the national debt within 10 years and phase out the individual income tax, including interest payments on the national debt; and (2) provide incentives for private sector investment in capital goods, clean energy generation, and infrastructure development.
Amends the Internal Revenue Code to impose a 1% fee, offset by a corresponding nonrefundable income tax credit, on every specified transaction that uses a payment instrument, including any check, cash, credit card, transfer of stock, bonds, or other financial instrument. Defines "specified transaction" to: (1) exclude any deposit into a personal account of an individual and any transfer between accounts, and (2) include retail and wholesale sales, purchases of intermediate goods, and financial and intangible transactions.
Establishes in the legislative branch the Bipartisan Task Force for Responsible Fiscal Action to review the fiscal imbalance of the federal government and make recommendations to improve such imbalance. Provides for expedited consideration by Congress of Task Force recommendations.
Repeals after 2021 the individual income tax, refundable and nonrefundable personal tax credits, and the alternative minimum tax (AMT) on individuals.Not bad at all. But it turns out that the 1% tax is way too large. Chaka Fattah appears to be basing his calculations on the assumption that transactions in the US are running at $445 trillion - see his post on the Huffington Post on the 21st March. As I've argued previously, the figures from the BIS for the US show that the real numbers are more like $3000 trillion a year. On the basis of that number, a value under 0.1% should be plenty to replace not just income tax in the US, but all the other main taxes.
There's not been much comment on H.R. 1125. There were 43 comments on the Huffington Post article - few of them seem to be positive. People just don't seem to understand that replacing income tax with a 1% transaction tax would be good news for them. There was a piece on the Tax Foundation website that came up with the old "businesses don't pay taxes - only people pay taxes" story. It also claims that it is the equivalent of the "Gross Receipts Tax" mechanism. Neither criticism makes sense. There's another slightly less negative post on Annette Nellen's 21st Century Taxation blog. One point made by both sites is that businesses could end up with a "pyramiding" effect where taxes build up internally. But if the tax is set at a rate of below 0.1%, such effects would be very small.
Anyway, it's nice to know that there is a real proposition that is currently (in theory) under discussion. Sounds like the people behind the Tran$action Tax site should get in contact with Chaka Fattah.