For the industry, Barack Obama’s proposal to levy a special $90 billion tax on the largest banks is almost touching. In a sense, many industry leaders are protesting believing it is unfair, punitive, and vindictive. More so, banks won’t be paying the amount but instead, customers will suffer the most.
Although the amount is a pittance, using tax policy to punish people is definitely not a good idea as what JPMorgan Chase Chief Executive Officer Jamie Dimon stated. He believed that it is not good for all businesses to pass their costs on to customer.
So why does the bankers get so upset with the new policy? This is because the administration wants to charge banks a fee that is expected to raise $90 billion over 10 years. According to reports, Bank of America and JPMorgan will be putting in $1.5 billion each for the policy. This amount of money will then be used to go toward defraying the cost of the $700 billion TARP – Troubled Asset Relief Program during the economic recession.
One of the implications that are brought about by the program is tax calculation limit’s the impact of the fee to larger banks and it’s designed to create and incentive for banks to stay smaller and keep their leverage in check.
At the height of the context, the huge number might also come out of banker bonuses and not customer accounts. As such, it is suggested that at times you might want to consider simply meeting your responsibilities, and urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill, but by rolling back bonuses for top earners and executives. Obviously, this is a no-no for many bankers.
That may well be, but bankers would prefer to have customer absorb the cost. After all, it is fine if it brings in some revenue to repay taxpayers.