WASHINGTON (Reuters) - The tax on banks proposed by the Obama administration would be passed along to consumers, a leading Republican lawmaker said on Thursday, citing a nonpartisan budget analysis.
Senator Chuck Grassley from Iowa said the findings from the Congressional Budget Office show that lawmakers need to understand the consequences before authorizing the tax designed to recoup taxpayer bailout funds used to stabilize the financial system.
“The cost of the proposed fee would ultimately be borne to varying degrees by an institution’s customers, employees, and investors, but the precise incidence among those groups is uncertain,” the CBO said in a letter that responded to questions from Grassley.
The CBO’s study also found that the tax would result in a “slight decrease” in the total supply of credit to the financial system.
President Barack Obama proposed the bank tax in January accompanied by an anti-Wall Street rhetorical push from the administration. Obama said the tax would be designed as a way to ensure that taxpayers would be made whole from its investment in rescuing the financial system.
The proposed Financial Crisis Responsibility fee is projected to raise $90 billion over 10 years and could be extended if the cost of the bailout exceeds that amount.
The fee was included as part of Obama’s budget proposal but it is unclear if lawmakers will pass such a plan.
Grassley said on Thursday that the CBO’s analysis that investors, customers and employees of the firms would bear a portion of the cost raises serious questions.
“A lot of analysts have said banks would pass the fees onto their customers. The CBO analysis confirms this and adds a lot of points for consideration from a very credible source,” Grassley said in a statement.
Reporting by Karey Wutkowski; Editing by Gary Hill
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