Obama's Penalty Tax Could Hit Banks That Refused TARP Funds

Friday, 15 Jan 2010 07:48 AM

By John Berlau

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
President Obama's so-called Financial Crisis Responsibility Fee is a tax in search of a target.

Today, the president declared, “We want our money back.” Yes, his proposed tax on financial institutions with assets of $50 billion or more would be levied on the banks that paid back the bailout money — with interest — and on institutions that may not have even taken TARP funds, while most likely exempting Fannie, Freddie and the car companies that still owe billions upon billions to taxpayers.

The hypocrisy doesn’t end there. At a time when President Obama and his administration have been cajoling banks to make more loans, this tax would directly hit that ability, particularly if it’s levied — as the president suggested today — on the level of debt an institution has.

This would be contractionary and put a big crimp on economic expansion. And as a multitude of economic studies have shown, taxes on corporations are nearly always passed on to consumers.

These taxes would likely hit bank depositors in the form of new fees and lower interest payments.

My organization, the Competitive Enterprise Institute, stood against the bailouts and thought the government should have let poorly managed firms fail.

Some of the TARP recipients, like BB&T Corp., hadn’t engaged in the foolish mortgage and credit practices, yet were pressured by the government to take the bailout money so the “bad banks” wouldn’t be stigmatized by taking TARP money.

Regardless, being a recipient of a government subsidy should not allow the government to control the firm’s profits and compensation any more than a stadium subsidy should allow the government to cap the wages of superstar athletes.

Finally, by taxing some businesses and not others, and casting the tax as a penalty for past misdeeds, the Obama administration has raised constitutional issues of whether this tax runs afoul of the equal protection clause and is a “bill of attainder” that singles out certain people for punishment.

A New York federal court recently ruled that Congress’ singling out of the group ACORN for defunding because of past actions was a punishment that could only be levied by a court, violating the bill of attainder clause.

Under this expansive interpretation, this tax too could be considered punishment without trial and also a bill of attainder.


© 2014 Newsmax. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Phony Fannie-Freddie Reform Empowers the Left

Monday, 14 Apr 2014 14:37 PM

As I wrote in 2008, “some of the biggest “housing advocates” also have politics in their portfolios. . . .

Dodd-Frank Reined In by Democratic Judges

Monday, 31 Mar 2014 07:41 AM

On March 21, a 2-to-1 Democratic panel of judges unanimously overturned district Judge Richard Leon’s July 31 ruling tha . . .

George Washington Was a Founding CEO

Friday, 14 Mar 2014 07:56 AM

One of our first entrepreneurs was George Washington, whose birthday we celebrate on the official holiday of Feb. 17 and . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved