As the headlines continue to batter Wall Street this week (my favorite story du jour being this one from CNN: “SEC staffers watched porn as economy crashed”), politicians are taking the opportunity to take a second look at a tax aimed at punishing slapping on the wrist warning sending some kind of message to the financial industry. Yep, talk of the “bank tax” is back and I’ll be frank: I have no idea what the tax is really about.
You may remember that President Obama had suggested the tax earlier in the year. It started out as an effort to reel in what was perceived as greedy banking profits. That seemed popular since as long as we’re mad at corporate America, we’re willing to tax them. But the suggestion that it might be passed along to consumers worried legislators – after all, what good is a punishment if it just gets paid by someone else?
The tax was then repackaged as a revenue raiser. And who doesn’t want to raise more revenue? Except that everyone knows that it’s code for raising taxes which isn’t quite so popular right now.
With no real spark to move it forward, the idea for a bank tax kind of languished for a few months.
*Thank goodness for Goldman Sachs.*
There’s nothing like a good financial scandal to remind Americans that we’re supposed to be mad at Wall Street. And just like that, the bank tax is all the rage again. Just yesterday, U.S. House Speaker Nancy Pelosi (D-CA) indicated that Congress is giving “serious consideration” at the idea of a bank tax. Reports suggest that may be true in the House but the Senate is keeping quiet. Give them time. They just need another scandal to get the phones ringing (Countrywide? Is that you calling?).
Here’s an idea – instead of taxing the banks for excessive profits, tie the payment of interest on savings accounts to the rate charged on loans. The general population will be encouraged to save more and get a greater interest payment (which they will pay tax on), and bank profits will be decreased making nearly everyone happy.