Skip to comments.The New Plan To Impose An Extra Tax On Wall Street Hinges One One Big Question
Posted on 02/27/2014 10:25:01 AM PST by SeekAndFind
Yesterday, Max Baucus (D-MT) and Dave Camp (R-MI) introduced a tax reform bill that would force a new asset tax on big Wall Street banks, and naturally Wall Street isn't having it.
The summary of the bill alone is about 200 pages, but for the Street, it all boils down to one simple, nasty debate that's been raging since the financial crisis.
Either Wall Street banks are still too big to fail or they're not.
And, as a result, either Wall Street banks are getting help from the government in order to survive, or not.
The help is the form of a subsidy that lets Systemically Important Financial Institutions [SIFI] borrow at a lower rates than other financial institutions.
Here's how the Camp-Baucus bill talks about the issue:
While tax reform cannot undo Dodd-Frank, it can and should ensure that Wall Street reimburses the American taxpayer for a portion of the subsidy it receives. The Tax Reform Act of 2014 requires that SIFIs reimburse American taxpayers for a portion of this subsidy by:
Imposing a new excise tax on certain SIFIs, as defined by Dodd-Frank.
Requiring these institutions to pay a quarterly 0.035-percent tax on their worldwide consolidated assets in excess of $500 billion.
The way Camp and Baucus see it, their policy is essentially returning a portion of the subsidy banks get from the government back to the American people.
The way Wall Street's men on on The Hill see it, there is no subsidy. Period. And so the tax policy is arbitrary, and will hurt Wall Street's business.
(Excerpt) Read more at businessinsider.com ...
An eventual per-transaction Tobin Tax is almost inevitable IMO. It polls almost as well with low-info voters as raising the minimum wage.
The big banks don’t operate as capitalists, they are instead crony capitalists that keep politicians in office in exchange for support, financial subsidies, financial repression of savers and pensioners, and personal immunity from prosecution for executives for their blatant fraud and market manipulation. What makes it worse is that the big banks are allowed to take incredibly large and heavily leveraged risks against small and overstated collateral values, sucking out short-term profits and bonuses while creating a dynamically unstable global financial system.
Other than that... nothing to see here, I suppose...