Daily Tax Update - June 29, 2010

“BANK TAX” PROVISION IN WALL STREET REFORM BILL REPLACED: This afternoon, House and Senate conferees to the “Wall Street Reform and Consumer Protection Act” reconvened and changed the pay-for language in the bill that would have provided for a “Financial Crisis Special Assessments” or bank tax. The new pay-fors would raise the FDIC premium ratios from 1.15 to 1.35 and make changes to the Troubled Asset Relief Program (ensuring that no future commitments would be made from that fund). The changes were due to Republican opposition to the bank tax provision, which was added at the last minute during conference negotiations, and in the hope of securing sufficient votes to pass the final bill.

  • The bank tax provision would have required the Financial Stability Oversight Council to impose risk-based Financial Crisis Special Assessments (“Assessments”) on financial companies to fully offset the net deficit effect of the legislation. The bill had numerous fundamental uncertainties, including the rate of tax, the tax base, and the manner in which a series of factors would be applied to determine the assessments, all of which would be determined by the Council.
  • Republican Senators Brown, Snowe and Collins criticized the last-minute addition of the bank tax provision to the bill. Brown refused to support the bill with the added language. Snowe said, “I heard about it through media reports.” Collins said “I'm not happy" with the new fee. Collins added, “I'm taking a look at the specifics of the bill.” Senators Feingold and Cantwell continued to believe the bill did not go far enough. These views, combined with Senator Byrd's passing, meant the bill did not have the votes.
  • Earlier today, House Financial Services Chairman Barney Frank countered, “Do they want to add to the deficit? Is there another way? What's their other way?” Meanwhile, “House Republican Conference Chairman Mike Pence said, “The imposition of a job-killing tax on large financial institutions to create a $19 billion slush fund to finance future bailouts is nothing short of bleeding this economy in the midst of the worse recession in 25 years.”
  • For additional information, contact Philip R. West - pwest@steptoe.com
  • A summary of the conference report can be accessed here

TAX BILLS INTRODUCED JUNE 28TH:
H.R.5615: To amend the Internal Revenue Code of 1986 to repeal the medical device tax, and for other purposes.
Sponsor: Rep Bilbray, Brian P. [CA-50] (introduced 6/28/2010) Cosponsors (None)

H.R.5617: To amend the Internal Revenue Code of 1986 to provide for home energy conservation bonds.
Sponsor: Rep McDermott, Jim [WA-7] (introduced 6/28/2010) Cosponsors (4)

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