The Bank Tax is Back (and it is still the wrong time)
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President’s Obama proposed FY12 Budget has resurrected the idea of a Bank Tax disguised again as a “Financial Crisis Responsibility Fee”. The Administration is pushing for a tax on the largest financial institutions to payback taxpayers for the support they provided to the financial sector – even the companies who have repaid their debt (with earnings in many cases) to the American public.
The Chamber has long been an opponent of the bank tax because of the potential to choke credit essential to job creation. Even before the Administration announced its original proposal, the Chamber sent a letter to then OMB Director Peter Orzag and Treasury Secretary Timothy Geithner.
In addition, last fall we released a study by Hal Scott, the Nomura professor of international finance systems at Harvard Law School, that exposedthe bank tax’s unintended consequences. A look back through the report shows that the six issues Professor Scott highlighted are still timely months later:
- Cutting off credit;
- The wrong tax at the wrong time;
- Uncertainty about the size of the TARP shortfall and arbitrary deadline;
- Potential for double taxation;
- Possible excessive taxation; and
- The wrong way to reduce leverage and risk.
All noteworthy, and I encourage you to read the report in its entirety.