How Obama plans to tax the biggest banks

Stan Alcorn Jan 19, 2015
HTML EMBED:
COPY

How Obama plans to tax the biggest banks

Stan Alcorn Jan 19, 2015
HTML EMBED:
COPY

President Obama will address both houses of Congress and the American people Tuesday to discuss the State of the Union.

The address is expected to touch on tax reform, including new tax credits for families with two working parents; bigger, simpler tax credits for child care, college and retirement; and a plan to pay for it all with higher taxes on what the administration calls the “wealthiest.” That includes the wealthiest people, with tax hikes on capital gains and inheritances, but also the wealthiest financial institutions: Those with at least $50 billion in assets.

More specifically, it’s a tax on bank debt. Anat Admati, a Stanford University professor of economics and finance, says this could help push back perverse incentives in the current tax code, which encourage banks to do business with borrowed money. But it’s an approach that has been proposed before, and as recently as 2010 when it was called the Financial Crisis Responsibility Fee. It failed back then and with Republicans in charge of Congress, it doesn’t have a chance, says Joel Slemrod, an economics professor and director of the Office of Tax Policy Research at the University of Michigan.

 

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.