The 'Bank Tax' Gains New Popularity With World Leaders

What a difference a few months make. After months of deliberation, world leaders are inching toward a consensus on imposing some form of a tax on large financial firms, the Wall Street Journal reports.

In January, the Obama administration announced what was effectively a tax on financial firms that are "Too Big To Fail." The levy sought to not only reclaim "every penny" of taxpayer money put toward rescuing the financial sector, but was also intended to close the gap in the subsidies these firms receive by virtue of their size and implicit government guarantees.

The bank tax concept hasn't come without a host of objections from Wall Street. Financial industry trade groups have called Obama's proposed "Financial Crisis Responsibility Fee" punitive, claimed the costs would be borne by customers -- a claim that was ultimately backed by the Congressional Budget Office -- and have generally dismissed the tax as an exercise in populism.

But, as the WSJ notes, world opinion may be shifting. Germany, France and Sweden have made plans to impose some sort of bank tax, while U.K. authorities have already levied a one-time 50 percent tax on financial industry bonuses in London. At the June meeting of the G20 in Canada, the bank tax may be revisited to solidify international implementation, the WSJ notes.

As for the U.S., there's still a great deal of debate about the structure of the so-called bank-tax. Congress is leaning toward a fund that pays for bailouts before the crisis, but the administration has a different approach. Here's the WSJ:

The Obama administration prefers to impose a levy after a crisis, arguing that establishing a fund in advance could encourage bankers to take too much risk because the fund could become a way to finance troubled banks, rather than shut them down.

The administration's proposal would use a temporary government loan to handle crises and then recoup the money from banks later after a crisis. To recoup payments for the recent crisis, the Treasury has proposed a "financial crisis responsibility fee" on the short-term liabilities of banks with assets of more than $50 billion.

Comments

[research]

10:26 PM on 03/29/2010

Any money earned earned from capital manipulation, should be heavily taxed.

Profit from investment in companies that create things or offer non-monetary services should be taxed at a lower rate.

outlaw CDS.

Outlaw derivatives.

Outlaw Leverage.

Force Wall street to invest in main street.

[freespeech2]

09:43 PM on 03/29/2010

Lets see...
You forced some banks to take TARP money,
They paid it back with interest,
You levy an additional tax to pay for the financial crisis,
Which is going to come out of my pocket.

Priceless...

[Middle Blue]

12:19 PM on 03/30/2010

We always knew it was our money in the end -- The crowd in control is < 10 years from retirement, already rich, doesn't know anyone who isn't rich, and they're old enough to know that they won't live forever.

So, they just don't care for a simple reason -- it doesn't matter to them.

No law is going to change that.

Watch them -- They'll weather the whole thing, and we'll all move on to some other topic after "the economy" gets better.

Maybe, just maybe, one thing HAS changed --- Everyday people 'get it' that Wall Street doesn't think about jobs.

Next, maybe they'll understand that Wall Street also controls economic policy -- Even under Obama.

[nopilikia]

06:28 PM on 03/29/2010

Let's wait for the Kudlow reaction. If he loves it like the Financial Reform Bill in the Senate very bad for America. If he hates it, then it's probably very good for America's bottom line.

[Pussinboots]

02:21 PM on 03/29/2010

That would be a great way to boost our credit scores! Look at all the money we could borrow from the Fed at rock bottom interest rates like Goldman Sachs. We could even give ourselves gigantic bonuses from our loans and just write it off!

[hypnotoad72]

05:37 PM on 03/30/2010

Well, if corporations are being treated AS PEOPLE... where do we sign up, indeed?

[Pussinboots]

01:53 PM on 03/29/2010

If corporations now have the same rights as individual people, then do we have the same rights (and benefits) as a corporation? Is there a way for the middleclass to exploit this to our advantage? Lots of smart people on here today, would love to hear your thoughts on this.

[Jannsmoor]

02:03 PM on 03/29/2010

I think we should all be able to take our debts "off balance sheet" and privitize our gains and socialize our losses. Where do I sign up?

[hypnotoad72]

05:37 PM on 03/30/2010

Seconded.

[maxhardon]

02:24 PM on 03/29/2010

That's it! Run your family like a business. Declare all your expenses as losses. Bundle your profits off the books and get a refund every year.

[Kache]

01:45 PM on 03/29/2010

The TBTF banks will of course threaten to pass the "cost" of their "assessment" on to customers. But it is an idle threat. They are not a monopoly - small banks will not have the assessments and will compete quite handily in that environment.

[Ivan B Good]

12:44 PM on 03/29/2010

If the world leaders want it, its probably a bad idea

[Jannsmoor]

01:12 PM on 03/29/2010

Pretty mindless comment. The substance of the idea of taxing the TBTF banks that crashed the world's economy so they can repay a tiny portion in restitution for the immense damage they caused is a GREAT IDEA and you should be supporting it.
Unless of course you don't believe in justice.

[Kache]

01:40 PM on 03/29/2010

Yeah, like the Michigan Militia has a better idea?

[rjhuntington]

12:39 PM on 03/29/2010

Nationalize the Federal Reserve. Rename it the United States Reserve, and make it publicly owned. The interest on the money supply will then accrue to the benefit of the US treasury instead of private bankers like it does now. This could completely pay for government and eliminate the need for any income taxes at all.

Restore the issuing power. Nationalize the FED.

[spinns17]

01:36 PM on 03/29/2010

each state should have there own bank .it would be better to controll what goes on .plus intrest would go to the state ,to use on what is needed .like schoools and roads .some say states could make between 300 to 600 billion on intrest from loans .it could even bring down corp ,and personal taxes we pay to the states .could be a win win for the states .

[rjhuntington]

02:37 PM on 03/29/2010

I agree that each state should have its own publicly owned bank and that the interest from loans should pay for state government. I would do this in addition to nationalizing the FED into the US Reserve. The US reserve would loan to the state banks and the state banks would loan to commercial banks in the states.

When Pennsylvania was a colony, this is how they did it. There were no taxes in Pennsylvania at that time because of the colonial bank and the use of debt-free currency.

If this were done nationally and at the state level both, we would not need income taxes at all.

[Kache]

06:15 PM on 03/29/2010

The problem is that a Newt Gingrich would run your bank differently than a Nancy Pelosi. North Dakota's state bank used to make direct loans (70 yrs) until it ran into a stream of Republican controlled legislatures. As soon as the Democrats regained power they changed it so the bank uses it's money to underwrite loans made by commercial banks - keeping costs down. The only direct loans are to students, and new farmers or businesses in their first 5 years.

[stargazer13]

12:12 PM on 03/29/2010

and who will end up paying for this ? I am sure it won,t becoming out of the CEO,s bonus for a job well done check !

and I am sure it won,t be deducted from banks profits either !!

so that only leaves the customers !

my mattress is looking better all the time !!

[Jannsmoor]

12:40 PM on 03/29/2010

Your pessimism and defeatism and lack of economic and business sense is depressing. Banks charge the highest amount they can. What they charge is unconnected with their costs. That's what free market capitalism is all about. Maximizing profit.
So taxing the Wall Street Profiteers who crashed the world's economy is a GREAT idea.

[stargazer13]

01:15 PM on 03/29/2010

must maximize profits at all costs !!! human , environment , health are not to be considered

for they mean nothing compared to the profit !! margin

free market profits is all that matters ! is that what your saying ?

because in my view ! it was straight up theft ! this crises was engineered !

engineered to finish the job of decimating the middle class in our country !

taxing the wall street thieves will in the end be paid by us the customer !

[Hecataeus]

01:24 AM on 03/30/2010

Only customers at the "too big to fail" banks need to worry about that.

[marijam]

12:08 PM on 03/29/2010

They aren't a threat just to Americans, they are a threat to the sovereignty of all nations and a big step towards "one world" government - run by the banks and multinational corporations.

[ErnestineBass]

12:19 PM on 03/29/2010

True!

Too bad world "leaders" don't have the foresight or gumption needed to establish PUBLIC, national/state-owned banks, and tell the private banking cartel to stuff it.

Hey, North Dakota figured this out a long time ago - why can't the rest of the world?

[StJames]

12:38 PM on 03/29/2010

I wonder if the "people" could create a people's bank???? I have a Korean acquaintance
who is part of a group of women who pretty much have formed their own savings banks...

[aflyinyoursoup]

11:53 AM on 03/29/2010

This is all smoke, because consumers will ultimately bare the burden of any tax levied on these money-changing racketeers.
The only way to prevent another TBTF financial crisis it to break them down into smaller entities and insure that any of their casino gambling operations are well isolated from consumer banking operations.

[Jannsmoor]

11:57 AM on 03/29/2010

It is not a sure thing that consumers will bear the burden of increased taxes. In fact, taxing Wall Street trading milliseconds ahead of the market because they know the order flow will end that practice and save 'consumers' billions of dollars.

[aflyinyoursoup]

12:03 PM on 03/29/2010

Sounds like you have quite a bit more knowledge about this sort of thing than I do.
I stand corrected.
Thanks.

[StJames]

12:39 PM on 03/29/2010

You are so right...taxing Wall St. transactions would be a wonderful idea....

[Kache]

01:50 PM on 03/29/2010

The tax would apply only to TBTF banks. Thousands of smaller banks would love to compete against a TBTF bank that was trying to pass that tax on to it's customers. I think the "we'll just screw our customers" threat is an idle threat.

[Jannsmoor]

11:32 AM on 03/29/2010

Sorry President Obama, you are way off base on this one. The firms that take the greatest risk and fail will be unable to pay ANY tax after their bankruptcy. And make no mistake about it, the next time Wall Street needs a bailout, and they will if you don't make some serious reforms, Wall Street better go into bankruptcy.
My support for anyone who bails out another Wall Street firm will evaporate.
Either break up the Too Big To Fail banks or tax them until they break themselves up. There is no other serious alternative. Until they cease to exist, they are a threat to all Americans.

[TXfemmom]

11:22 AM on 03/29/2010

They should put heavier taxes on any risky investment, such as derivatives.

[spinns17]

11:21 AM on 03/29/2010

i never met a rich person that wanted to pay there fair share of taxes.maybe we should take away there protections ,and services that our government gives them?

[FredKnowsBest]

11:25 AM on 03/29/2010

What is their fair share? Do you pay your fair share?

[spinns17]

11:57 AM on 03/29/2010

.33% of my income.

[LemonMeringue]

11:53 AM on 03/29/2010

They would not be able to get rich without the support of the richest country in the world. They owe that tax, in every possible way a person can owe something.

The progressive tax system worked. We don't have it anymore. It's why the country is broke.

[spinns17]

11:58 AM on 03/29/2010

bush tax cuts did us in .

[mrspiffy]

11:14 AM on 03/29/2010

Its a good idea if they can make it happen.
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