House Ways and Means Committee Democrats are mulling over their options on how to implement the White House’s proposed “financial crisis responsibility fee” aimed at recouping taxpayer losses from last year’s bailouts.
House Republican leaders, meanwhile, are studying poll numbers that make them feel secure in opposing that bank tax, even though soaking the nation’s big banks seems like a surefire political winner.
Specifically, a late January survey from Republican polling firm McLaughlin & Associates found that 52 percent of likely voters opposed such a tax, believing that it would be passed along to consumers.
“This poll confirms what Republicans have always known: That customers pay for increased taxes,” said Sam Geduldig, a Republican lobbyist who represents financial services clients. “House Republicans won’t take the bait; they know these proposals create uncertainty and paralyze lending. Moderate Dems in difficult districts will likely balk as well.”
The administration based its proposed fee on a financial firm’s liabilities. But House Dems are considering a different approach some think would solve the pass-on problem.
Specifically, the House tax writers may use a firm’s income as the basis for the fee. Some economists argue that this would be less likely to be passed on, especially a tax on banks with the highest incomes, said one House Democratic aide.
“An income-based levy would be a straightforward approach to ensure that the American taxpayer is made whole for their extraordinary assistance to financial institutions. It is one idea under consideration and will be the subject of discussion in the coming weeks,” said House Ways and Means Committee Democratic spokesman Matthew Beck.
The White House has argued that since the proposed fee would be levied only on financial firms with more than $50 billion in assets, small- and midsized competitors would not pay the fee. Big firms that passed it on to customers would do so at the risk of losing market share to their smaller competitors, administration aides argue.