The government introduced new legislation to tax all “big banks” 0.15% of their assets to recoup about $120 billion in TARP money. What’s interesting is that the government is also taxing banks who did not receive TARP money, while conveniently leaving out AIG and the auto industry!
Three Takeaways From Asymmetric Regulation:
1) Because the government is imposing a tax on assets for all big banks, they are encouraging all banks to take excessive risk and accept hand outs in the future. If a non-bailed out bank is getting punished, why not join in on the fun too? Friends at government-owned Citibank all went down to the Rose Bowl using free $500 face value company tickets ($1,000+ in the after market) with tax payer’s blessings. Meanwhile another friend who works at a non-TARP bank can’t spend more than $100 for a client dinner total, without having to get approval. Message to friend: tell your bosses to party it up if Citibank is having a great time!
2) AIG is exempt from new taxation because AIG is 80% owned by the government. If the government punishes AIG, they are punishing themselves. Federal government employees are raking it in, and I’ve spent about one hour so far learning how be a $170,000 a year Department of Transportation employee if my blogging career doesn’t make it in three years. So exciting to have such a lucrative back up! Back off people, the job is mine!
3) The auto industry, which has paid back absolutely nothing, and is the biggest contributor of the $120 billion in tax payer losses is protected because the rank and file auto worker is deemed more precious than the rank and file finance worker. I’m all for helping out hard working people who had nothing to do with the collapse. But, what did your local TARP bank teller do? Nothing, just like the factory man at GM had nothing to do with the latest horrible design and corporate strategy of the 2010 Buick LaCrosse. Remember when GM executives flew in their private jets to the Congressional hearings? We need to support private jets for auto execs like we need to support higher taxes for more pork spending.
The past 24 months has shown you that you must look out for yourself first. When Armageddon hits, nobody else fights for you, because they are fighting for their own survival. Furthermore, if there is a government hand out, be it through home loan forgiveness or TARP money, take it and run. The government will spread out the cost to everyone so don’t be the one left paying for something without getting anything in return. Take advantage of the system, because the system will always take advantage of you.
Readers, do you believe the US autoworker is more precious than the US financial services worker? If so, why?
Do worker unions, like the United Autos Worker union play a big part in lobbying the government to take care of certain people over others? Is this fair? Would creating a Financial Services Workers Union help this group of people?
Do you think Congress will pass Obama’s tax proposal into law?
What government bailout money have you benefited from?
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Sam Samurai – “Slicing Through Money’s Mysteries”
Arthur @ Financialbondage.org says
government won’t create jobs (other than federal jobs) and won’t fix our economy. they won’t fix our problems they ARE the problem. I’m still waiting for Americans to “get” this.
@Jason @ MyMoneyMinute
It’s not that the banks are too big to fail, it’s that they are too big to be bailed out…
I agree with fredct, there is nothing unconstitutional about having a targeted tax — government does it all the time. Tax the things they do not want you to be/do, and give tax breaks on the things they want you to be/do.
If the tax is targeting banks with assets over $50b, then that is the government saying we don’t like banks to have assets over $50b. This is just like the insanely high tax on cigarettes — government doesn’t want you to smoke.