Several of the nation's largest banks are combating an effort by Republican Rep. Dave Camp of Michigan to impose a new tax on financial institutions and have begun pulling political donations from Republicans until the proposal is stopped.
Bank of America, Citigroup, Goldman Sachs, J.P. Morgan Chase and others are leading the opposition to the proposal by the House Ways and Means Committee chairman, The Wall Street Journal reported
Industry officials have been putting pressure on GOP lawmakers to oppose the plan, leading 54 Republicans to send a letter to Camp saying they have "deep concerns" about the bank tax, arguing that it will hurt the economy because it will reduce access to credit.
The opposition effort has unified both large and small banks.
"This is a fairly large effort," a spokesman from the bank lobbying group, The Financial Services Forum, told the Journal. "Most of the offices we're talking to are saying they're opposed, and some are willing to make their views known."
While the banking industry donates to both Democratic and Republican candidates, in the 2012 election cycle 69 percent of its donations went to Republicans and 31 percent went to Democrats. Wall Street donors began opposing
the plan as soon as they heard it was part of Camp's tax overhaul he presented in late February.
The tax is part of Camp's effort to simplify the tax code and broaden the tax base. It is designed to help offset some revenue loss from a lower proposed corporate tax rate.
It is also of great concern to banks because it has the support of President Barack Obama, who has included a similar proposal in his budget since 2010.
The tax would require banks with more than $500 billion to pay 0.035 percent on total consolidated assets every quarter. Some banks could end up having to pay more than $2 billion per year, if passed. And the federal government would bring in about $86 billion over the next 10 years.
"It's troubling on a number of fronts," said James Ballentine, chief lobbyist at the American Bankers Association. "It seems to be for revenue purposes alone. The message has caught many members by surprise."
Republican Rep. Patrick McHenry of North Carolina, who sits on the House Financial Services Committee called Camp opposing the tax. when he first heard that it was to be included in the tax plan.
McHenry told the Journal that he and other House Republicans think that the levy effectively punishes banks for making loans and unfairly singles out one industry.
"Those of us that deal with financial-services policy every day are a little more steeped in the ins and outs of the consequences of the policies we make and their impact," he said.
Reps. Peter King and Michael Grimm, both from New York, also reached out to Camp voicing their opposition to the proposal in a letter they sent to the Michigan congressman.
"We believe this tax on lending will hurt consumers by making credit less available and more costly, stifle business grown, and cost jobs," the two New York congressmen wrote.
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