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President May Impose Fee on Financial Institutions

The White House is considering fees imposed on financial institutions to help recoup some of the losses from the Troubled Asset Relief Program (TARP) and help reduce the federal deficit. Bloomberg News is reporting the fee would bring in as much as $120 billion over 10 years. The White House is not commenting on the Bloomberg report, but the news outlet says the final structure of the fee and how to target big banks has not been settled. It is expected to be part of the 2011 budget.

Some tax experts tell Bloomberg that the parameters will be so porous that many financial institutions will be able to get around the fee.

“Any new tax is always more complicated than the designers anticipated,” said Ed Kleinbard, the former staff director of Congress’ nonpartisan Joint Committee on Taxation who is now a law professor at the University of Southern California. “When the numbers involved are this large, it’s very difficult to design on the fly.”

President Obama is expected to hand Congress his budget next week. The $700 billion TARP is helping to contribute to the $1.4 trillion deficit. You can read the entire Bloomberg article by clicking here.