Bills
| 3.23.22

Letting Taxpayers Put Up to 10% of Their Federal Income Taxes to Paying Down the National Debt & Cutting Spending by an Equal Amount (S. 1552)

Do you support or oppose this bill?

What is S. 1552?

(Updated May 9, 2019)

This bill — known as the Debt Buy-Down Act — would allow taxpayers to designate up to 10 percent of their federal income taxes to pay down the national debt. In addition, mandatory spending cuts (aka sequestration) in an amount matching the estimated designations for the previous tax year would take effect 15 days after Congress concludes its annual session unless it enacts spending cuts equal to that amount. Like other sequestration spending cuts, those mandated by this bill would be across-the-board except for Social Security benefits, benefits for uniformed services, and interest payments on the national debt.

This legislation would sunset after the first fiscal year in which there is no public debt.

Argument in favor

With the national debt at nearly $20 trillion, taxpayers should be able to have 10 percent of their federal income taxes go toward paying down the national debt. That ensures their tax dollars still fund other priorities while they choose to focus on helping to lighten the burden of the national debt for future generations.

Argument opposed

Taxpayers can’t be able to pick and choose what their tax dollars go toward for even a portion of the tax burden. Paying down the national debt is less important than other priorities in the federal budget, and forcing Congress to cut spending through sequestration is never a good idea.

Impact

Taxpayers; the Treasury Dept.; federal programs subject to sequestration; and Congress.

Cost of S. 1552

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sponsoring Sen. Jeff Flake (R-AZ) introduced this bill to empower individual taxpayers to put up to 10 percent of their federal income taxes to paying down the national debt and requiring Congress to cut spending by an equal amount:

“With the national debt hurtling toward an unprecedented $20 trillion, it’s time taxpayers had real power to reign in Washington’s big spenders. At any rate, I hope this commonsense solution makes like the national debt and grows a lot of interest.”

This bill currently has one cosponsor, Sen. Marco Rubio (R-FL).


Of Note: In its most recent budget and economic outlook, the Congressional Budget Office (CBO) projected the national debt is going to continue to grow at an accelerating pace in years to come. Among its findings were that in three decades the amount of debt held by the public will be nearly twice as high, relative to GDP, as it is today (75.4 percent). That means the debt held by the public would be approximately 1.5 times the size of the U.S. economy, a level that the CBO explains would have the following “serious negative consequences for the budget and the nation:”

  • “Federal spending on interest payments would increase substantially as a result of the increases in interest rates, such as those projected to occur over the next few years.

  • “Because federal borrowing reduce total saving in the economy over time, the nation’s capital stock would ultimately be smaller, and productivity and total wages would be lower.”

  • “Lawmakers would have less flexibility to use tax and spending policies to respond to unexpected challenges.”

  • “The likelihood of a fiscal crisis in the United States would increase. There would be a greater risk that investors would become unwilling to finance the government’s borrowing unless they were compensated with very high interest rates; if that happened, interest rates on federal debt would rise suddenly and sharply.”



Media:

Summary by Eric Revell

(Photo Credit: SColombo / Creative Commons)