InsuranceJournal.com reported in February on a plan put forth by what it called “Congress’s top Republican tax writer” that could see the country’s largest insurance companies and banks having to pay a quarterly 3.5 basis-point tax on any assets that exceed $500 billion.
United States Representative and Chairman of the House Ways and Means Committee Dave Camp has proposed the plan that would raise taxes for about 10 of the country’s largest companies (such as General Electric, as well as the country’s largest banks, such as Bank of America, JP Morgan, Wells Fargo, Morgan Stanley, and a few others).
The article reports that the tax could raise $86.4 billion for the U.S. government over the next 10 years. The article adds that Camp released the plan in order to broaden the tax base and lower corporate and individual tax rates.
The proposal isn’t likely to become law in 2014, the article continues. If and when passed, a levy would be assessed each quarter, applying the 0.035 percent rate to the total consolidated assets of each of the companies, after taking into account the $500 billion exemption.
The plan stipulates that, what the article calls “systemically important financial institutions,” also would have to pay the tax. The article adds that the plan has already selected American International Group, Inc. (a subsidiary of GE) as well as Prudential Financial, Inc. The plan also may designate MetLife, Inc.
Should the plan succeed, the tax on banks would become a permanent part of the tax code with that $500 billion threshold actually indexed to GDP growth.
Manufacturers can accelerate tax write offs for such things as capital equipment, but banks receive few breaks and usually have effective tax rates that are higher than manufacturers, the article adds.
But a “rate-lowering, base-broadening” plan such as Camp’s could “provide a significant net tax cut to banks,” the article continues.
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