Wall St. Weighs a Challenge to a Proposed Tax (Bank Tax Is Unconstitutional?)

[kpete]

Source: New York Times

By ERIC DASH
Published: January 17, 2010

Wall Street’s main lobbying arm has hired a top Supreme Court litigator to study a possible legal battle against a bank tax proposed by the Obama administration, on the theory that it would be unconstitutional, according to three industry officials briefed on the matter.

In an e-mail message sent last week to the heads of Wall Street legal departments, executives of the lobbying group, the Securities Industry and Financial Markets Association, wrote that a bank tax might be unconstitutional because it would unfairly single out and penalize big banks, according to these officials, who did not want to be identified to preserve relationships with the group’s members.

The message said the association had hired Carter G. Phillips of Sidley Austin, who has argued dozens of cases before the Supreme Court, to study whether a tax on one industry could be considered arbitrary and punitive, providing the basis for a constitutional challenge, they said.

Administration officials and other legal experts have called those claims dubious.

Read more: http://www.nytimes.com/2010/01/18/business/18bank.html?hpw

[zogofzorkon]

1. It should be unconstitutional

to bail their sorry asses out w/ our tax dollars. It should be illegal for thieving banksters to transfer our money to their pockets as bonuses. It is outrageous for banks to single out and charge groups of cardholders in excess of 25% interest with penalties and fees on top of that. They ought to keep their whining greedy mouths shut before people who work for their money get seriously mad at those that live large by providing an overpriced service with arbitrary and capricious terms and fees, and demand taxing the money sucking bastards into oblivion.

[UpInArms]

2. you said it evein better than I could have - +1

stealing from the taxpayers to bail out the thieves is/was an abomination.

[HillbillyBob]

10. We have 2 accounts one @ BofA and Wachovia

we are so strapped that its hard to even hold out enough to change out to
a credit union..we would have long ago and have planned to when we can have enough extra to get the accounts open.

[naaman fletcher]

3. oh fuck them

Don't take taxpayer bailouts then.

[Abq_Sarah]

4. Do you believe

Banks that paid back TARP funds with interest should have a tax levied on them?

[naaman fletcher]

5. Yes.. the taxpayers took a risk, the risk might have worked out, but they still took a risk..

The banks have accepted that the government is there to bail them out. If so, the government has a right to limit how much risk they can take, and to charge a fee for that risk.

[karynnj]

12. The action kept the financial system from failing

Many banks have paid back the money they got directly from the government, but they also got a huge amount of money indirectly from the AIG bailout. They were the counterparties that AIG owed money to because AIG "insured" their risky investments with default credit swaps. AIG and all the investment banks made huge profits on those risky investments before they failed. Had AIG been allowed to fail, they would have taken many of these huge banks (some foreign) with them.

Other than indirectly from taxes, it was not the US that ever gained anything from the risks - it was the banks, whose CEOs lived in a second gilded age who did. When it failed, it was the governmment that ultimately paid - Obama is right, "we want our money back".

[UpInArms]

6. yes

they "had to have" OUR money - now they need to make certain that if they need money again, they have either paid in advance or saved some of their own.

Are you enjoying an increased salary after being bailed out? Just askin'.

[Abq_Sarah]

7. Wrong person to ask

I'm a small business owner. Of course, we weren't important enough to merit a bailout or any type of assistance but if the Congress tried to tax me because some businesses get loans through the SBA, I'd be pissed as hell.

Do you think this tax should be levied on automobile manufactures as well?

[safeinOhio]

8. What is your effective rate on federal tax?

Most small business that I know of or have owned paid little if any federal tax. Withholding on employes and state and local taxes were a different story. Most big banks and auto companies pay a lower "actual" rate than I do on my income.

[Abq_Sarah]

16. I have a LLC

And I have elected pass through taxation. That means all the profits are claimed as my income and I'm taxed on it as an individual. My "rate" depends on how much my company earns. Of course, I pay the full 15.3% on self employment taxes, only half of which I can write off, because there's no one to make a "contribution" on my behalf.

[safeinOhio]

23. Sarah, too bad you don't pay what Goldman Sachs payed

for 2008 they paid 1% of profits on $2.3 billion and paid $10.9 billion in bonuses. I don't think small business owners, as yourself, can defend the low rates that huge corps get away with. They write the tax laws though their lobbying of congress. You have to pay your 15.3% SSI insurance up to about $100,000 then it goes away. That tax for bank CEOs goes away after the first 10 minutes of the work year. The proposed tax of large banks with over $50 billion will not close the gap between you and them.


http://en.wikipedia.org/wiki/Goldman_Sachs#Tax_contributions


Tax contributions
Goldman Sachs expected in December 2008 to pay $14 million in taxes worldwide for 2008 compared with $6 billion the previous year, after making $2.3 billion profit and paying $10.9 billion in employee pay and bonuses. The company’s effective income tax rate dropped to nearly 1 percent from 34.1 percent in 2007 due to an increase in permanent benefits as a percentage of lower earnings and changes in geographic earnings mix<56><57>

[zogofzorkon]

9. Since auto manufacturers aren't banks

a bank tax wouldn't apply to them.
If you're asking whether they should be taxed for receiving a bailout my answer is no. Bailing out a company that actually produces a product and employs union labor that puts money back into the economy, local and national is far different from bailing out a greed driven entity that sucks the life out of the populace and uses its extorted loot to live like kings. Tax their asses, tear down their castles and threw them into the streets like those they foreclosed upon. Let the thieving bastards earn 18k a year working in Burger King with a bonus of leftover fries.

[PassingFair]

11. Zogo! Where have you been all of my life? I was going to say "Welcome to DU", but I see...

you've been here for a while.

Keep Posting!!

[Abq_Sarah]

14. TARP legislation

Limits loans to financial institutions. Which explains why Bush, Paulson and the Congress allowed Chrysler and GM to receive TARP funds, right?

How's that repayment schedule working out? Last month, GM paid back one billion of the 5 they owe the taxpayers. Chrysler has indicated they do not owe the taxpayers a single cent.

I'm sorry but it's unethical to punish banks that have repaid their loans with interest. Once they've made the taxpayers whole, they no longer "owe" us a damned thing.

[brentspeak]

15. Well, I'm all broken up over how "unethical" it is to tax the banks

who are gorging themselves like pigs on obscene profits from investments made utilizing taxpayer funds.

First take a look at the hundreds of thousands of foreclosed homes and all the millions of Americans dying and drowning in unregainable credit card debt thanks to ururious interest rates, then get back to us on the meaning of the word "unethical".

[Abq_Sarah]

17. When I sign for a loan

No one has ever put a gun to my head. No one has ever forced me to take a credit card with a 23% interest rate. No one has ever forced me to take an adjustable rate mortgage. I have a hard time sympathizing with someone who runs up 30K in credit card debt when I'm driving a 20 year old vehicle and cutting my expenses to the bare bones to keep from going in debt.

[brentspeak]

18. Very few people sign up for a credit card with a 23% interest rate

Cards often begin with less than 10% rates -- only for banks later to jack up those rates upwards of 29% for any arbitrary reason they can conjure. There's also little things called "sudden unemployment" and "medical emergency" which have something to do with your "runs up $30k in debt" scenario. It doesn't sound like you know enough about this topic to really comment.

[Abq_Sarah]

19. Actually

I know quite a bit about this topic. When it comes to debt, the vast majority of people are not victims of anything other than their own poor choices. How do I know? Been there.. done that.. fought like hell to get out from under it and will never do it again. It was no one's fault but my own.

[zogofzorkon]

20. Yep poor choice that's the ticket. I hope you know who

chose to make high risk gambles with other peoples money, chose to rig the game so that even if they lose they win, chose to manipulate markets, chose to rate junk as AAA, chose to con people that had a dream of home ownership into a mortgage scheme that almost guaranteed default, chose to charge fees using methods that maximized the penalties, chose to peddle debt with misleading advertising; and when all their debt from poor choices came due chose to demand the victims bail them out. In their graciousness for being pulled from the brink they turned around and chose to bend us over and then chose to reward themselves with more mountains of money and stock . My patience is at an end with them, tax them into oblivion, tear down their places of business, burn there homes, send their cars to the wreckers, sink their yachts, level their country clubs, shred their handmade suits and step on their rolexes. It is better than what they deserve.

[Abq_Sarah]

22. Honey, your problem isn't with the companies

It's with our government which has enabled them to operate. The first step is to clean house and get rid of the bought and paid for representatives. Of course, the problem is that people aren't going to vote their guy out for writing laws that help the industries that fork over obscene amounts of cash in the form of campaign donations, as long as they're getting a little piece of the pie. Want access to health care? Great! We'll pass a law that forces you to hand over money to my buddies from the insurance industry.

[karynnj]

13. The big investment banks subject to this tax benefited personally

from the huge AIG bailout. The money owed was owed to them because AIG insured their toxic assets. The investment banks and AIG took huge risks and were saved by the government when the risks failed horribly.

[Doctor_J]

21. I keep wondering when we are going to have it out with these people

we're so weak it's embarrassing.