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  • Obama's Bank Tax - The Victim is YOU!

    CBO letter to Sen. Grassley on Obama's Bank Tax

    So President Obama wants to slap a tax on banks, but should you really care? Absolutely. Those taxes are going to wind up costing YOU money, whether you’re a customer, a bank employee or an investor, according to the non-partisan Congressional Budget Office (CBO).

    As ABC News reports, the CBO wrote a letter yesterday to Sen. Chuck Grassley (R-IA) in which it highlighted that the American people will bear the true brunt of the President’s proposal. From the CBO’s letter:

    [T]he ultimate cost of a tax or fee is not necessarily borne by the entity that writes the check to the government.

    The cost of the proposed fee would ultimately be borne to varying degrees by an institution’s customers, employees, and investors.

    Customers would probably absorb some of the cost in the form of higher borrowing rates and other charges, although competition from financial institutions not subject to the fee would limit the extent to which the cost could be passed to borrowers. Employees might bear some of the cost by accepting some reduction in their compensation, including income from bonuses, if they did not have better employment opportunities available to them. Investors could bear some of the cost in the form of lower prices of their stock if the fee reduced the institution’s future profits.

    President Obama announced his bank tax during his State of the Union Address in January and claimed it would be a way to recoup money dished out to banks as part of the Troubled Asset Relief Program bailout. The truth, though, is that those banks already paid-back the bailouts, with interest; the real deadbeat offenders are Freddie Mac, Fannie Mae, Chrysler and General Motors, who have yet to repay their debt. (Take a look at the above chart to see who has repaid – and who hasn’t.)

    The President’s proposal was a not-so-thinly-veiled populist proposal, intended to play to an America disgruntled with government bailouts and those institutions that won government handouts.

    He better brace himself for an America that finds itself even more disgruntled when they realize they’re getting hit with the very tax that was meant to appease them.

    Posted in Economics [slideshow_deploy]

    17 Responses to Obama's Bank Tax - The Victim is YOU!

    1. Pingback: Economics 101 | thelobbyist

    2. Pingback: AntiObamaBlog.com » Obama’s Bank Tax – The Victim is YOU!

    3. Ozzy6900, CT says:

      Notice how the four companies (Fannie, Freddie, GM and Chrysler) who have NOT paid anything back to TARP and are government run, do not get taxed. The rest who HAVE paid either partially or fully (and some with interest as Bank of America did) get slapped with the tax. President Obama and the Administration must be stopped and stopped now! Instilling this tax will deal a death blow to loans, savings and the banking system. This will also be another nail in then coffin of capitalism which we all know, President Obama hates. He needs to be taken out of office if this Country is to survive.

    4. Rick Katy, TX says:

      One must remember BO does not tax his cronies. It goes against Chicago politics. BTW, no tax in the history of our country has not been passed on to consumers. First, the government bails out these parasites with our tax dollars. Now we have to absorb the tax in higher interest rates, fees, etc.

      Just how bright is this twit in spin city east? From all appearances, he is just a bio-system for a protozoa. How far our education system has fallen if he really did graduate from Harvard.

    5. John Roane Sarasota, says:

      Only fools think that anything the Federal Government does isn't always paid for by We The Tax Payers, There is no Federal Money, Federal Free Money, or Free money of any kind. Wake up!

    6. Pingback: Must Know Headlines 3.8.2010 — ExposeTheMedia.com

    7. Pingback: Michelle Malkin » Chart of the morning: Guess who’s paying the Cover Tim Geithner’s A** “Bank Tax?” Y-o-u.

    8. DavidP says:

      This completely misses the point. *Of course* the bank tax is passed on to customers. This makes these "too big to fail" (or more appropriately, "systemically dangerous institutions") less competitive (because they charge their customers more by passing on the tax) with the smaller banks that the tax does not apply to. Thus this is an economic disincentive to have such huge banks.

      Taxes are a traditional way for government to encourage/discourage things – for instance, marriage is encouraged by the tax code to a certain degree. Short term trading is discouraged (see the short vs. long term capital gains rates). Etc. Using taxes to encourage smaller (i.e. not systemically dangerous") banks by making very large banks less competitive (due to passing along the tax) is a good thing. That is, unless Heritage believes that having banks that are too big to fail is good (and thus bailouts are good). Hopefully that is not what Heritage is advocating!

    9. Pingback: Richmond Liberty Alliance Blog » Blog Archive » Monday Morning Progressive Report

    10. Pingback: Bank Tax – The Real Victim is YOU! « TotalterrY

    11. Pingback: Who Pays For The “Bank Tax”?

    12. Pingback: Chart of the morning: Guess who’s paying the Cover Tim Geithner’s A** “Bank Tax?” Y-o-u. « Thoughts Of A Conservative Christian

    13. JackieL says:

      DavidP you almost make sense. We are suppose to be a free market, government isn't supposed to pick winners or losers. All the federal government is doing with this tax is further intruding in a system they have already intruded on. Who is going to pay the price? The bank employees, investors, and consumers. That is the point of this article. I think you missed the point.

      If the fed really thinks these companies are "to big to fail" then they should be broken up. We have a system for that called bankruptcy. However, the fed decided they should burden the tax payers with TARP. The only problem is the some companies like Bank of America are picked by the fed to be losers. While other companies like GM are picked to be winners and are allowed to continue wasting tax payer money.

    14. Scott, USA says:

      Do we really still need to be told that whatever expenses are added to the cost of doing business will be passed along to the consumer? How many times does that have happen to some people before they catch on?

      I guess people are just too busy being mad at businesses making profits….while they sit at home unemployed because their company wasn't making enough of a profit to keep them on the job.

      Wonder if they've figured out their pension plans are also tied to those profits too.

    15. DavidP says:

      JackieL I respectfully disagree with your recommendation that bankruptcy is the solution. The options are:

      A) Make banks over a certain size illegal. This is very heavy handed government intrusion that I doubt many "small government" folks (like myself, and I assume yourself and Heritage) supports.

      B) Whenever a TBTF bank gets in trouble, bail it out, at taxpayer expense. Citi has had *three* such bailouts over the recent couple decades. This is the "heads I (the bank) wins, tails you (the taxpayer) loses approach, so I doubt it is acceptable.

      C) Use tax (or other) policy to discourage banks from being TBTF. This is the proposed policy.

      D) Use bankruptcy.

      Option D, which you propose, was rejected by both the Democrats and Republicans (Paulson, Bush, McCain, Obama, Geithner, etc., etc.) because they all assert that a bankruptcy of banks that are TBTF would damage the economy to an extreme level.

      You may disagree with the Republicans and Democrats on this, and assert that option D is the ideal option. However, at this point there is very little support for option D. Note that the huge banks now have an implicit guarantee from both the Democrats and Republicans that the taxpayer will bail them out if they have problems. This gives them an unfair competitive advantage over mid-sized and small community banks and is basically socialism in favor of the large banks.

      I agree that directed taxes are distasteful. But isn't corporate socialism ("heads the big banks win massive profits, tails the big banks get bailouts and the taxpayer loses") even more distasteful?

    16. Pingback: Senator Dodd and Financial Regulation: New Plan, Old Problems | Step Down Obama

    17. Pingback: Obama Plan Blows Secret Kisses to Wall Street | BeyondBailouts.org

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