As anticipated, the President’s State of the Union Address included a new version of the fee proposed in 2010 in which the biggest banks would pay for what some deemed their responsibility for the financial crisis (see Client Reports in the CRISISFEE series). The new fee is different – it would cover all regulated financial institutions with assets over $50 billion – but it’s just as strongly opposed, if not still more so, by the industry and by Republicans who believe sector-specific taxes of this sort dampen economic growth. Democrats like Maryland’s Chris van Hollen (D-MD) are also proposing a version of the financial-transaction tax (FTT) to balance the budget, but we doubt this will advance any better than the sectorial fee. This may seem like victory for financial behemoths, but there’s a hidden cost to winning: spent political capital. How dearly will it set the industry back?
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