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Is Obama's tax hike on financial firms fair?

President Obama is proposing a tax on financial firms to recoup taxpayer losses from the financial bailout.

By Jodi Westrick  |  January 14, 2010; 10:56 AM ET  | Category:  National Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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So 78% support raising their own banking fees. Amazing!

Posted by: FLvet | January 14, 2010 12:02 PM

Yay tax increases when they aren't lending any money which is driving up unemployment and driving down the GDP. They are greedy SOB's Hoooorayyyyyyyyyyyy. Obama Obama Obama!

So what will the gov. do with that money? Pay off Acorn some more, how about another couple billion to buy some more votes for healthcare? Or how about another 6 million to pay off Hillary's campaign debt.

Posted by: Votingis4Suckers | January 14, 2010 12:09 PM

VOTINGIS4SUCKERS

If we had a government run National Bank, that did the bidding of the people and would compete with the profiteers, maybe the private banks wouldn't rape us all. Of course, no government bank could do as well as Lehman Bros.

Posted by: daweeni | January 14, 2010 12:15 PM

I always have a problem with "punishment" taxes, ie "those people there are making too much money." Now, if you come up with a tax that is consistent with the tax code that for example is more progressive fine, but there's always a slippery slope when you you start creating tax code based on the mob whim of the day.

I'm not happy with the situation either. Without a taxpayer bailout, these guys would in many cases be making zero dollars, how is it that they are patting themselves on the back now?

But the screwup occured when the government decided to throw bankruptcy precedent out the window and create...well, recreate the bankruptcy process. Well, you got the results you got. Between GM, the banks, AIG, you've managed to give them lots of money without the previous control you would have had. "bankruptcy is not an option." Now, they are backtracking and trying to fix that but unfortunately in an emotional environment.

Posted by: jhtlag1 | January 14, 2010 12:18 PM

People seem to think Obama's proposal to tax the financial institutions is good.From which pocket of the bank comes out the money- TAX PAYERS

Posted by: jayrkay | January 14, 2010 12:43 PM

The government does not know how to run a business. This kind of c@ap is just a small preview of what national health care will be like.

Posted by: FLvet | January 14, 2010 12:46 PM

Posted by: "FLvetSo 78% support raising their own banking fees. Amazing!"

>You can always move your money and investments to a small investor, community bank or credit union that will not be affected by the new taxes on these too big to fail banks and financial instituions.

Posted by: jhtlag1 "always have a problem with "punishment" taxes, ie "those people there are making too much money." Now, if you come up with a tax that is consistent with the tax code that for example is more progressive fine, but there's always a slippery slope when you you start creating tax code based on the mob whim of the day."

>They are making too much money! What you call "mob" rule is actually the voice of the people. The government is the people and it is OUR responsibility to take back our country and our money from the top 1% and Wall Street.

Posted by: tazmodious | January 14, 2010 12:47 PM

Taxing them is fine AND robust regulation is absolutely necessary.

Posted by: org2 | January 14, 2010 12:53 PM

Posted by: FLvet "The government does not know how to run a business. This kind of c@ap is just a small preview of what national health care will be like."


Typical Conservative mis-speak to say that the government is the root of all your problems.

Actually, the government is Us. We ultimately decide what the government does and doesn't do. We, the People, need to take back control of our country.

Unfortunately the Conservatives and their fat cat banker friends don't want, We the People, to have the power to call the shots.

Posted by: tazmodious | January 14, 2010 12:53 PM

FLvet: "So 78% support raising their own banking fees. Amazing!"

Some banks that benefitted most from the bailouts, such as Goldman, don't even do retail business.

Do you think any banks that got assistance have CUT any fees as a result of the assistance?

If the aided-banks raise fees, let the customers move accounts to other banks.

How about if the FED simply raised its funding rate to at least a smidgeon above inflation. High time we stopped giving out free money, merely stoking eventual inflation and allowing banks to post phoney profits.

Or how about if we simply taxed 100% of any 2009-10 bonuses over $500k to executives of banks on the dole, or the ones whose huge AIG derivative exposures got raked from the fire? If that's too little pay, there are "plenty who will take their places." Isn't that the argument GOP folks always use against the millions of employees who think that $30k is "too rich"?

Posted by: jkoch2 | January 14, 2010 12:54 PM

Can you imagine voting "not sure"? You can be note sure, that is fine, honest, a good thing, but voting not sure? It is like going to a restaurant and ordering nothing, staying for awhile then paying the bill (nothing) and then call it an evening on the town.

They should have that category for elections I suppose.

You'd get the candidates or the initiatives and you'd get the not sure box.

I'll bet some people would stand in line to vote not sure.

Posted by: shrink2 | January 14, 2010 12:54 PM

Bankers and lawyers are the scum of the earth and would sell their mother's dead body for a profit.

Posted by: beenthere3 | January 14, 2010 12:58 PM

This tax on banking firms - the very same firms that have done nothing to restrict their gambling practices, have restricted loans to US small businesses and consumers, have given record "bonus" payments to overpaid executives - is a wise and prudent idea.

Those who stand on the side of banks know they are a definite minority.

Posted by: WillSeattle | January 14, 2010 12:58 PM

Move your money out of the Big Banks and then tax them for everything they've got.

There are plenty of small banks that can take their place.

Just like Conservatives always say that every American worker is replaceable by cheap overseas labor. We can apply that same principle to the fat cat bankers and Wall Street financial institutions.

Let them leave. Our country will run better without them.

Posted by: tazmodious | January 14, 2010 12:59 PM

The way the tax would work is that it would hit the biggest banks hardest (as well as their customers).

So yeah, if you're going to bank with a large bank that poses a systemic risk, you should be paying higher fees to reflect the real cost.

Posted by: JPRS | January 14, 2010 1:15 PM

Votingis4Suckers,

One thing we could start doing is using the tax to recover the costs to taxpayers of the financial bailout. We're talking about tens of billions of new taxpayer debt that's directly associated with assistance to large financial firms in 2008-09.

Posted by: JPRS | January 14, 2010 1:18 PM

The people who nearly destroyed America should be fined.

Fine them Mr. President Fine them!

When they squeal you will know you are in the right spot.

Fine them until for ten year no obscene bonuses are paid.

America is behind you Mr. President, America is behind you.

Posted by: walker1 | January 14, 2010 1:23 PM

Hey, fair is fair. Taxpayers saved their banks with infusions of billions of "free" capital which the banks have used mainly to save their own skins with little thought to assisting in economic recovery. When you can borrow with essentially zero interest rates and invest in paper with virtually no risk and excellent returns you can restore your balance sheets with assurance.

Further, the bankers got tired of seeing all those hedge fund managers making out like bandits and so decided to use their banks as sources of finance for the same activities. After all that's the way money is made--with other people's money. And my personal capital is never at risk but I profit handsomely as long as my bets pay off.

At the same time with our bonuses we can engage in what the old timers called "corporate looting" and the shareholder be damned if he expects to receive higher dividends or perish the thought --a special dividend.

With no government or congressional oversight (we have already paid them off) we are free to steal as much as we want and then more in really good years.

So, oh yeah for these and other reasons, why not act to take a small bite out of the melon along with all the other undeserving bonus swine? Apparently this is the only possibility for the public interest to be served and if all that "irreplaceable" talent decides to leave and go to medical school, so much the better for the country. Under Obama's medical system for the nation doctors will be in great demand and no danger of mal practice suits there either, apparently.

Posted by: AmericanInterestsFirstandLast | January 14, 2010 1:40 PM

Actually, the suggestion of moving accounts o smaller lacal banks is an excellent suggestion, and one which is beig touted more and more as an alternative, as well as a way of letting the big banks know tat they cannot go on with "business as usual." Most of the smaller banks have been fiscally responsible, continue to lend, and invest in the local economy. Their CEOs do not make huge bonuses. Their profits reflect the profitability of the local economy. They are a wise investment.

I say, let the big ones go to hell, along with their overpaid CEOs. As another blogger said, "they'd sell their own dead mother." They certainly sold a lot of people a bill of goods, and now, after their irresponsible behavior, don't want to be regulated. Their answer to regulation: "trust me." Say, what?

Posted by: garoth | January 14, 2010 1:47 PM

This is absolutely beautiful. Now the GOP is rushing to defend bankers. That will work out really well for them in this climate....

These companies gamble with other people's money, then come crying to the government when their bets go bad.

For those of you claiming this will hurt the taxpayer, and that this will ultimately come out of the pockets of the taxpayer: Not unless you keep your money in these corrupt institutions! Local credit unions are the way to go. I'll gladly only get .3% interest, as opposed to the .5% that BofA is offering for that peace of mind. What is the difference? The numbers are so small it is inconsequential

Posted by: maurban | January 14, 2010 1:51 PM

Just curious - will the banks be ensured the same rights in court as the terrorists that are scheduled to be tried in our courts will enjoy? Obviously not. Big business is the only, real evil Barack Obama sees as a threat to our welfare. Good God!

Posted by: jahoby | January 14, 2010 2:16 PM

The recent meeting the biggest banking fat cats just had, has them smiling all the way to the bank.

These guys and their recent gambling escapade has destroyed millions of American home owners equity and almost brought down the world financial system.

China would have hung at least a few of them.

**BEIJING (AP) 12/8/09 -- China executed Tuesday the former manager of a securities company -- the first execution of an executive from the communist country's financial sector, state media said.**

I don't advocate the China action but it is one sure contrast to the pussy-footing we do here. Not a single executive spent even one day in jail. They got taxpayer bailout money as punishment instead.

Stringing someone up is a surefire way to wipe the simle off anyones face.

Instead what we have here are the gamblers belling back up to the casino tables with our money, carrying on with risky derivative trading (mostly unregulated) but high returns is the gamble pays off).

So far it has paid off and thats where the attitude and the bonuses are coming from.

Posted by: Mnnngj | January 14, 2010 2:24 PM

Tax them, by all means. Also can we bring back some time-honored America customs and also tar-and-feather, ride them out of town on a rail and horsewhip them?

Posted by: fenian | January 14, 2010 2:41 PM

Beautiful...we are in the midst of a major recession and the jobs picture becomes more bleak with every monthly report and the wizards of the West Wing want to...wait for it...implement a new tax. So, let's consider where we are: massive health care taxes, cap and trade taxes, banking taxes...I'm sure I've overlooked some. Any sane person would recognize that raising taxes -- of any kind -- in the midst of a recession is plain foolish. FYI...the proposed bank tax isn't about anything other than punishment. And, btw, equally foolish as the bulk of the TARP funds have been re-paid with interest/dividends that provided GovCo a nice little profit. Let's now turn around and hit the banks in the chops...absolutely brilliant. Rookies.

Posted by: boomer131 | January 14, 2010 2:43 PM

You do realize that the more you tax the folks who are making money (and from what I gather, the financial institutions have repaid their loans with interest....see the last time a Lib was able to pay off his credit card) the more that cost is going to be passed on to you, right? But hey, power to the people! we're all equal in the bread line.

Posted by: luca_20009 | January 14, 2010 2:44 PM

What you call "mob" rule is actually the voice of the people. The government is the people and it is OUR responsibility to take back our country and our money from the top 1% and Wall Street."

ie. Socialism. Textbook definition of it actually.

Posted by: Votingis4Suckers | January 14, 2010 2:45 PM

"take back our money from the top 1% and Wall Street."

Oh so you've made millions that was stolen from you by rich people and people that work on Wall Street? How did they steal this money from you? Did you report this crime? I sure would report it if someone stole all the money I had.

Posted by: Votingis4Suckers | January 14, 2010 2:50 PM

I'll gladly only get .3% interest, as opposed to the .5% that BofA is offering for that peace of mind. What is the difference? The numbers are so small it is inconsequential."

Hhahahahah, this is a joke right? So you will allow yourself to make less money simply because you hate rich people and would like to see them have their money taken too? Rich people who don't tax you, who don't force you to buy prodcuts you don't want, and who you don't even know?

BTW You obviously do not own a house, .2 percent on a mortgage is ALOT. No wonder you will vote for this idiot Obama, you're a thief and you are voting for him to do the stealing for you because you are a coward. You do realize when you help another thief steal you are suppose to get a cut right?

Posted by: Votingis4Suckers | January 14, 2010 2:55 PM

Votingis4Suckers,

0.2 is the difference in interest on checking, savings -- not a multi-hundred thousand dollar mortgage.

You clearly are one of those folks -- more accurately idiots -- who think that lobbying interests give money to political campaigns as a matter of charity.

So we have a million dollar political donation that result in a billion dollar pay-off in new tax-credits, new profit centers, or regulatory loop-holes; clearly coincidental.

On top of this the Big Banks were reaping huge profits and the executives were reaping huge bonuses at a time that they were engaging in risky bets that ultimately jeopardized the entire financial sector.

Yeah, that's something that we should encourage.

Pure genius.

Why is it that uneducated wingnuts hate America so much?

Posted by: JPRS | January 14, 2010 3:05 PM

The reason this tax is fair is because we didn't engage in any form of business deal with these companies. We gave them a 0% interest, no strings attached float loan. We still expected to eventually get EVERY PENNY back, and maybe even make a residual $ or 2 off the action this cash was supposed to stir up. Instead these companies decided to use our $ to pay themselves back the $ they lost; all the while bitching and complaining that we've been calling them to the mat for all their BS. Since they don't want to play fair, it's time we took our ball and went home.

Posted by: KJR1 | January 14, 2010 3:07 PM

People seem to think Obama's proposal to tax the financial institutions is good.From which pocket of the bank comes out the money- TAX PAYERS
Posted by: jayrkay | January 14, 2010 12:43 PM
*************************

You should be banned for just spewing ignorant teabagging nonsense. Go back to Fox.

Posted by: LuckyLuLu | January 14, 2010 3:10 PM

Apparently jayrkay thinks that the TARP money came from money-trees, not taxpayers.

Posted by: JPRS | January 14, 2010 3:13 PM

This is in response to the previous comment made:
So 78% support raising their own banking fees. Amazing!
Posted by: FLvet | January 14, 2010 12:02 PM


My Answer is: If they raise the interest rates, we must all move to smaller banks and not encourage the TOO BIG TO FAIL BANKS.

Posted by: gladdyf | January 14, 2010 3:16 PM

Votingis4Suckers writes: "BTW You obviously do not own a house, .2 percent on a mortgage is ALOT. No wonder you will vote for this idiot Obama, you're a thief and you are voting for him to do the stealing for you because you are a coward. You do realize when you help another thief steal you are suppose to get a cut right?"

Yes, actually I do own a house. And I make six figures. Any reasonable person would realize I was talking about the meager interest rates on savings accounts, not a mortgage. But from your posts here you are obviously far from reasonable.

Here is a history lesson for you: The mortgage rate on the top tax bracket under Reagan was 50%, under Nixon it was 70%, and under Eisenhower it was 91%. Were they Commies too? Was Nixon a Communist because he taxed the rich double what Obama does?

Moron

Posted by: maurban | January 14, 2010 3:23 PM

I meant income tax rate, not mortgage rate

Posted by: maurban | January 14, 2010 3:23 PM

gladdyf,

I'd say the main problem with FLvet's reasoning is that he assumes there is no cost to Too-Big-Too-Fail. Apparently he/she has just awoken from a two year slumber.

The reality is that clients at the big banks are essentially getting benefits that are subsidized and underwritten by taxpayers (the CEO's of the banks are getting to pocket the subsidy as well).

The tax is so small in the scheme of things that it probably won't mean huge increases in fees or rates for customers of the Big Public Welfare Banks. Some may migrate, but most probably won't.

Also, the real cost of Too Big To Fail is potentially trillions not tens of billions of dollars. So the tax too is simply going to recouping money that's already been doled out to the Bigs at a loss. It's not going to be sufficient to cover the costs of future bailouts.

Posted by: JPRS | January 14, 2010 3:27 PM

Well, this small tax is a start.

For the level of criminal activity these financial hoodlums committed, I would suggest a 150% tax, prison time, and all staff being banned for life from any job related to finance.

These are the people directly responsible for double digit unemployment, businesses crashing and burning, and global financial ruin. Futures have been ruined, families torn apart, careers destroyed.

If these guys had merely stolen at gunpoint the same amount, they would already be in a federal penitentiary for LIFE! Somehow it's ok to be a career criminal as long as you wear an expensive suit.

The small tax proposed by is a good start, however. Once these thieves have been fully investigated, prosecuted and put away ALL THEIR ASSETS SHOULD BE SEIZED.

Every last dime.


Posted by: JC505 | January 14, 2010 3:30 PM

Then fair's fair. The UAW ran the auto industry into the ground. Let's require the UAW and AFL cio to pay off the $25 billion of tarp that went to the auto industry and the DNC to pay off the $100 billion that went to freddy and fanny because they encouraged undue lending and insuring risks to get more votes from home owners that got loans that they couldn't afford

Posted by: marden08 | January 14, 2010 5:12 PM

I can't so simply say the tax is fair or not fair as the issue is not so simple as that. The consequences of massive taxes must be thought out in advance and the potential harm it might cause to innocent
parties (small business, individuals personal finance's, American economic interests) balanced against the windfall profits these institutions have realized. Profits they have realized not only the bailout funds themselves but the interest free use of taxpayer money they have and even today are reinvested for enormous profits. This is too complicated for me. What I can comment on is:

1. As a rule, in our society, those who manage poorly or manage through fraud and profiteering, are not supposed to remain blameless and actually gain from their actions that caused others to suffer.

2. It is not enough to suggest a tax, whether just a popularist appeasement or a real tax that will be applied. What is reasonable in this situation is to try to eliminate the temptation of current and future executives to engage in this kind of behavior at all. The only way I can see that happening is to take away all the gains they have enjoyed from America's, and even the world's, economic disaster.

3. There are always winners and losers in trades. The people who invest understand that rule - they just want a level playing field and the certainty that priviledged violators of community trust will face the same consequencies as the rest of us.

RWF

Posted by: RWFRegency | January 14, 2010 6:38 PM

ONLY the banks and companies that received bailout funds should be taxed! I own stock in a very conservative and responsible bank, and they have had to cut their dividends to 30% of 2007 levels, which the letter I just got with the (much reduced) check claims is mostly due to skyrocketing FDIC insurance fees.

Posted by: dotellen | January 14, 2010 6:43 PM

"The government does not know how to run a business. This kind of c@ap is just a small preview of what national health care will be like."

POSTED BY: FLVET | JANUARY 14, 2010 12:46 PM
--------
Excuse me, but what we have seen in the last two years is that unregulated businesses cannot run a business.

Posted by: dotellen | January 14, 2010 6:45 PM

What a fantastic idea! The government can assume ownership of everything. We can then assume that the government grants us the opportunities that come from nature, and the government was formed to protect. Then all would be beholden to the government and taxed according to their individual success. Taxes collected could be distributed to the masses, and everybody would be happy. We could name the new government dependent economy "Socialism".

Posted by: rpatoh | January 14, 2010 7:55 PM

>They are making too much money! What you call "mob" rule is actually the voice of the people. The government is the people and it is OUR responsibility to take back our country and our money from the top 1% and Wall Street.

Posted by: tazmodious | January 14, 2010 12:47 PM
--------------------------------------
Once we have our money back do we still get to keep the stuff?

Posted by: rpatoh | January 14, 2010 7:58 PM

To help the banks was the mistake --- now to tax them is the mistake. The government tries to do things that hurt public interests. The tax code and loop holes are the root cause of the housing bubble ---- nothing ever changes.

Posted by: free_np | January 14, 2010 9:22 PM

isn't it the case that the US Government is in massive debt? Isn't it good economic sense to increase taxes to pay off that debt? And if it slugs the public, well, sorry, but US government debt is public debt. You're going to have to pay it off some time.

Posted by: david_leys | January 14, 2010 10:03 PM

Excuse me, but I think it is worth mentioning that this tax is tiny. TINY! At most it will amount to half a percent for some companies for a few years. After the rescue of these companies exploded our deficit and ground our economy to a halt, it is the least they can do. Especially considering they resist all efforts to stop them from doing it again. There have been no safeguards put in place to stop this from happening again! We will be right back here in 5 years. And there are short-sighted ideologues on this thread arguing that this is economically prohibitive?!?!? Do you believe the government must intervene every 5 years with $2 trillion dollars to save the free market system? $2 trillion that must be raised through increased taxes? If the answer is yes, then you can be against this tax. But if you feel the answer is no, then something must change to stop these mega banks from gambling away the financial stability of the US for their own personal gain.

Posted by: maurban | January 14, 2010 10:48 PM

The banks should not be charged a fee or taxed. The individual wall street execs who receive the bonuses should have the bonuses taxed at 99.99% and the proceeds of that tax should go to the poorest people whose homes are being foreclosed upon.

Posted by: mtnmanvt | January 14, 2010 10:52 PM

Fair? FAIR? How can you even use this word? Was it "fair" how the banks and other financials ripped off the country? Was it "fair" that billions of our tax dollars were wasted to prop up the gangster banks that had caused all this misery? Is it "fair" that the gangsters now want to give themselves bonuses while their victims have lost savings, jobs, homes, and retirement? No, what would be "fair" is for the culprits to be guillotined. That would be "fair."

Posted by: RichardHode | January 15, 2010 12:57 AM

It is not fair to levy a special tax on any group just because of what that group represents. However, since when does the Obama administration give a hoot about fairness or doing what is right ?

Obama and his group are socialists. To them, any tax levy is fair as long as it punishes the productive.

Help me get rid of the bastards at the ballot box in November, less than 10 months from now !

Posted by: raymeo | January 15, 2010 11:01 AM

What legal, constitutional law or right does Obama have that substantiates this 'tax'? There is none. Neither was there any regulation or constitutional law that gave Obama the right to take away the holdings of GM shareholders and give these monies to the Unions through the bankruptcy courts. This was equal to Jesse James holding up the bank and giving the monies to his friends because they voted him into the office of the presidency.

Posted by: prossers7 | January 21, 2010 9:36 PM

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