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Impose Some Discipline: Tax Credit-Card Use

October 21, 1990

Like Michael Schrage, I'm in favor of a 2% transaction tax on credit card purchases, "Plastic Tax Could Help U.S. Credit Line" (Oct. 11). What a great way to cut down on consumer debt and pay off the national debt.

According to Schrage, individual credit card debt in 1989 was $354 billion. Consumers have been encouraged to use plastic just like Congress has been encouraged to spend money on programs to improve our nation: education, health, welfare, defense, transportation, etc.

Individuals want new couches, cars, clothes. The government wants a new plane.

The only problem is that individuals as well as Congress can't pay off their debts. A 2% transaction tax would help. Consumers would be encouraged to switch to cash or checks, thus spending only what they could afford to pay at the time.

The 2% tax would go to pay off the national debt. It's a start toward curbing consumer credit, although it may take a decade for benefits to be noticeable.

Credit cards are convenient, but only 40% of customers pay off the bill each month. The other 60% go into debt like Congress, with interest charges so high that they can never be paid off unless you win the lottery. The tax isn't regressive because poor people aren't usually given credit cards willy-nilly.

Of course, the credit card companies would oppose such a tax because their pocketbooks would be affected. But, as a nation, we need to encourage saving (which is already taxed), rather than continuing the trend of the past 30 years--encouraging debt.

We can't discipline Congress if we can't discipline ourselves.



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