In his State of the Union address Wednesday night, President Obama repeated his call for a tax on banks, calling it “a modest fee to pay back the taxpayers who rescued them in their time of need.” That sounds good, everyone agrees the taxpayer’s money should be paid back. But there’s a bit of misdirection going on here.
As shown in the chart above, most big banks have already paid back the government money they received, with interest. On the other hand, most of the big companies that still owe billions to taxpayers, including Fannie Mae and Freddie Mac, and auto firms GM and Chrysler would not be subject to the tax. Only two big firms, AIG and GMAC, owe the government and would pay the tax. Even in these cases, the “modest fee” won’t add anything to the government’s coffers — any taxes they pay would simply reduce the amount the amounts they pay back.
The plan will do nothing to help taxpayers or get bailout money returned to the Treasury. It makes for good rhetoric — what politician doesn’t want to sound anti-bank nowadays? — but is no substitute for real policy. (Source: Heritage Foundation)
A real idea would be to get the taxpayers’ money back from Fannie, Freddie, GM and Chrysler. But that will probably never happen with this administration.
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