TAX NEWS - June 2010

U.S. May Follow Britain's Lead and Pass Bank Tax

As Britain attempts to reduce its budget deficit, the British government has instituted budget cuts and bank taxes. Germany and France are currently considering issuing a bank tax as well.

Since the United States does plenty of business in Britain, it is estimated that the U.S. will have to pay $3.5 billion in bank taxes to the United Kingdom.

According to FOX Business' Liz MacDonald, President Obama supports passing a bank tax in the U.S., too. While the government had to bail-out big banks during the recession, many people believe that banks should contribute to fixing the crisis and our large budget deficit.

As MacDonald underscores, Freddie Mac and Fannie Mae, among others, would be exempt from a U.S. bank tax. The Big Bank lobby group says that exempting these "too big to fail" banks would be unconstitutional. Exempting certain banks from the bank tax appears selective and arbitrary.

Not only would some banks be exempt from a U.S. bank tax, but some of the tax costs would be passed along to borrowers according to MacDonald.