“We want our money back,” said President Obama on Jan. 14. While most Americans would agree with that statement, they might not agree with the President’s approach to getting that money back.
In fact, the Financial Crisis Responsibility Tax may ultimately have a negative impact on the taxpayers that put up the money in the first place.
The Obama Administration believes that beneficiaries of the $700 billion Troubled Asset Relief Program (TARP) should start paying back the debt. To facilitate this, Obama’s plan will put in place a tax on banks having more than $50 billion in assets (property owned by the bank).
But if the tax really applies to the beneficiaries of TARP, wouldn’t this include automakers? In fact, banks and large insurance companies will be the only ones targeted by the after-TARP tax, leaving out General Motors and Chrysler. Once again the automakers fall under the category of “too big to fail.”
Further, the after-TARP tax would hit banks that already paid off their debt and insurance companies that did not accept bailout funds.
The after-TARP tax has the characteristics of a punitive tax with its main target being the US banking institutions. While the public is justifiably angry with financial entities that made reckless decisions but were spared the consequences, a tax that hinders the banks’ economic growth and diminishes their ability to lend money does the taxpayers more harm than good.