The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

CBO: Banks wont pay the new Obama bank tax, you will…

Posted by iusbvision on March 6, 2010

The government doesn’t want to be the baddie when it raises your taxes, so it places taxes and fees on various businesses, they pass on the cost to you and you in turn are angry at said business, when in reality it is your government you should be upset with.

Ask not for whom the tax bell tolls, it tolls for thee!

ABC News:

But the Congressional Budget Office today warned that “the ultimate cost of a tax or fee is not necessarily borne by the entity that writes the check to the government.”

“The cost of the proposed fee would ultimately be borne to varying degrees by an institution’s customers, employees, and investors,” the CBO said today in a letter to Sen. Chuck Grassley.

“Customers would probably absorb some of the cost in the form of higher borrowing rates and other charges, although competition from financial institutions not subject to the fee would limit the extent to which the cost could be passed to borrowers. Employees might bear some of the cost by accepting some reduction in their compensation, including income from bonuses, if they did not have better employment opportunities available to them. Investors could bear some of the cost in the form of lower prices of their stock if the fee reduced the institution’s future profits.”

The availability of credit – already a problem for some consumers and businesses – could also be limited by the proposed fee, the CBO said.

“The fee would probably lower the total supply of credit in the financial system to a slight degree. It would also probably slightly decrease the availability of credit for small businesses.”

The effect of the fee on the banks, the CBO said, would be “small”.

In response to the CBO analysis, Grassley released a statement, saying, “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. Before this proposal moves forward, Congress needs to understand the consequences, good or bad.”

One Response to “CBO: Banks wont pay the new Obama bank tax, you will…”

  1. Paul Geer said

    Once again, this is a great lesson on how government taxes are the cause of higher prices on goods and services, whole sale and retail.

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