President Obama today proposed the imposition of a tax on financial institution liabilities as part of his FY 2011 budget proposal set for release in early February. This proposal already has created a great deal of controversy in Washington, D.C.
The fee would impose a tax on the financial institutions that engage in the riskiest behavior with leveraged or borrowed financing. The liabilities would be determined by the appropriate banking regulator, collected by the IRS, and placed into the government’s general fund.
The fee would apply to financial institutions with more than $50 billion in total assets. About 50 different companies are expected to be assessed. The fee could cover between 15 and 20 banks, as well as 10 to 15 U.S. subsidiaries of foreign institutions. The fee would last at least 10 years and is expected to raise $90 billion.
The administration’s press release and its summary points are available online.
This proposal will be one of the most controversial and hard-fought proposals in the president’s budget, and both domestic and foreign-based financial services companies could be significantly impacted.
McGuireWoods Consulting, a subsidiary of McGuireWoods LLP, is one of the leading government relations firms in Washington, D.C. The consulting group looks forward to working with existing and new clients on this important issue. For more information, please call us as soon as possible.