Jan. 12 (Bloomberg) -- President Barack Obama plans to raise as much as $120 billion through a fee on financial institutions to help recoup losses from the Troubled Asset Relief Program and reduce the deficit, according to an administration official.
The White House hasnât settled on the final structure of the fee and how to target the big banks that have returned to profitability, said the official, who requested anonymity.
The plan is to have revenue from the fee dedicated to deficit reduction and to cover the amount that the Treasury Department estimates it will lose from TARP, which is $120 billion. Details will be contained in the fiscal 2011 budget that Obama will submit to Congress next month, the official said.
The governmentâs $700 billion rescue plan contributed to a record $1.4 trillion deficit last year.
Tax experts, who discussed the possibilities before the presidentâs plan was disclosed, say all of the administrationâs structural options, which include an income surtax, an excise tax, or a fee pegged on the value of assets or some other measure, are likely to be so porous that financial institutions would be able to sidestep most of them.
âAny new tax is always more complicated than the designers anticipated,â said Ed Kleinbard, the former staff director of Congressâ non-partisan Joint Committee on Taxation who is now a law professor at the University of Southern California. âWhen the numbers involved are this large, itâs very difficult to design on the fly.â
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOPwYFDDBrxk&pos=1
The White House hasnât settled on the final structure of the fee and how to target the big banks that have returned to profitability, said the official, who requested anonymity.
The plan is to have revenue from the fee dedicated to deficit reduction and to cover the amount that the Treasury Department estimates it will lose from TARP, which is $120 billion. Details will be contained in the fiscal 2011 budget that Obama will submit to Congress next month, the official said.
The governmentâs $700 billion rescue plan contributed to a record $1.4 trillion deficit last year.
Tax experts, who discussed the possibilities before the presidentâs plan was disclosed, say all of the administrationâs structural options, which include an income surtax, an excise tax, or a fee pegged on the value of assets or some other measure, are likely to be so porous that financial institutions would be able to sidestep most of them.
âAny new tax is always more complicated than the designers anticipated,â said Ed Kleinbard, the former staff director of Congressâ non-partisan Joint Committee on Taxation who is now a law professor at the University of Southern California. âWhen the numbers involved are this large, itâs very difficult to design on the fly.â
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOPwYFDDBrxk&pos=1
