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TARP Tax More Politics Than Economics

U.S. President Barack Obama today (Thursday) unveiled the widely anticipated "Financial Crisis Responsibility Fee," which effectively amounts to a tax on banks to pay back money the government lost on the Troubled Asset Relief Program (TARP).

The fee would apply to financial firms - both domestic firms and U.S. subsidiaries of foreign companies - with more than $50 billion in consolidated assets, and equate to 15 basis points, or 0.15% of a company's covered liabilities each year. Deposits assessed by the Federal Deposit Insurance Corp. (FDIC) would not count toward those liabilities.

The tax, which must be approved by Congress, would go into effect on June 30, 2010, and earn about $90 billion over 10 years, but could go on longer. The White House said collecting $117 billion would take about 12 years.

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Banking's Bigwigs Called to Carpet as Obama Prepares New Bank Tax

Four prominent Wall Street executives testified on Capitol Hill yesterday (Wednesday) about errors they committed during the financial crisis. But no amount of contrition or case making will be able to spare the financial services industry from the wrath of public opinion and a new tax to be imposed by President Barack Obama.

The bigwigs from Goldman Sachs Group Inc. (NYSE: GS), JP Morgan Chase & Co. (NYSE: JPM), Morgan Stanley (NYSE: MS), and Bank of America Corp. (NYSE: BAC) were called on yesterday (Wednesday) to explain themselves to the U.S. Congress' Financial Crisis Inquiry Commission (FCIC) - the ten-member commission appointed with goal of investigating the causes of the financial crisis.

"Over the course of this crisis, we as an industry caused a lot of damage," Brian Moynihan, chief executive of Bank of America, said before a standing-room only crowd in the House Ways and Means Committee room, The Wall Street Journal reported.

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Obama Bank Tax No Reason to Flee Financials

U.S. President Barack Obama plans to implement a tax on financial institutions to offset taxpayer losses stemming from the Troubled Asset Relief Program (TARP) and help reduce the deficit. But Obama's new bank tax is no reason to turn bearish on financials, which staged an impressive comeback last year.

At a time when many financial companies are gearing up to announce fourth-quarter and full-year earnings, as well as details regarding employee compensation and bonus payments for 2009, the government is considering charging banks fees to recover as much as $120 billion in lost taxpayer money.

While most of the big banks have started paying back their TARP investments, the government has yet to recoup large swathes of money that went to American International Group Inc. (NYSE: AIG), General Motors Corp., and Chrysler LLC. Last month, the Treasury estimated that the net cost of TARP to taxpayers would be $41.4 billion.

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Investment News Briefs

Former McKinsey Director Pleads Guilty in Galleon Scandal; Unemployment Claims Drop; EPA Tightens Ozone Standards; Cold Snap Threatens Natural Gas Production; State Tax Collections Plummet; Oil Slides From a 15-month High

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How Washington Will Mess with Your Money in 2010

In this era of growing government involvement, it's no surprise that Washington is poised to be the biggest economic wild card of the new year.

Indeed, investors who are trying to estimate the impact that politics will have on their portfolios in 2010 are likely finding this attempt at analysis to be an exercise in futility.

If that's been the case, read on: Political pundits - even those who claim to be impartial - spend a lot of time trying to score points for their side. But they aren't really that interested in the economic aspects of the endless battle. I certainly don't claim to be any more unbiased than the next person. However, I thought it worth trying to take an educated guess at what will actually happen, and what it will mean for our money.

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Obama Wants New Law to Tax Overseas Profits and Nail Tax Dodgers

By Don MillerAssociate EditorMoney Morning U.S. President Barack Obama today (Monday) announced a proposal for new legislation to pursue American tax evaders by closing loopholes and clamping down on overseas tax breaks for American businesses and individuals. Under provisions of the plan, companies would no longer be able to write off domestic expenses for generating […]

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Hong Kong Makes Huge Tax Cuts, Increases Spending on Infrastructure Intangibles

By Mike Caggeso Associate Editor Sitting on an estimated $15 billion budget surplus, Hong Kong's financial chief, John Tsang, said he would slash taxes, eliminate duties on beer and wine, increase spending on health services and introduce measures to bridge the income gap and reduce air pollution, AFP reported. Income taxes will be cut from […]

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U.S. Senate Passes Bill To Extend Internet-Tax Moratorium by Another Seven Years

From Staff Reports By passing a bill that would extend the moratorium on Internet access taxes for another seven years, the U.S. Senate last week gave proponents of the legislation hope that the extension can be signed into law before the moratorium lapses this Thursday (Nov. 1). The Senate bill is essentially an amended version […]

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