Republican bank tax proposal

[ERICOPOLY]

I can't figure out their math -- 3.5 basis points on $1.9 trillion is only $665 million.  However the article claims it is $2.7 billion:

 

 

quoting:

The biggest U.S. banks and insurance companies would have to pay a quarterly 3.5 basis-point tax on assets exceeding $500 billion under a plan to be unveiled this week by Congress’s top Republican tax writer.

 

quoting:

The basic arithmetic suggests that JPMorgan, which had $2.4 trillion in assets at the end of 2013, would pay $2.7 billion a year, or about 15 percent of 2013 net income.

 

http://www.bloomberg.com/news/2014-02-25/biggest-banks-said-to-face-asset-tax-in-republican-plan.html

 

 

 

[gary17]

Applied quarterly I believe

 

The plan would take effect Jan. 1, 2015, and the levy would be assessed each quarter, applying the 0.035 percent rate to each company’s total consolidated assets after subtracting the $500 billion exemption.

[A_Hamilton]

Applied quarterly I believe

 

The plan would take effect Jan. 1, 2015, and the levy would be assessed each quarter, applying the 0.035 percent rate to each company’s total consolidated assets after subtracting the $500 billion exemption.

 

It's a great plan. Let's tax JPM's $40 billion of goodwill. Define Bill of Attainder.

[rpadebet]

They are doing this in Puerto Rico already in order to balance the budget. Just a matter of time before they do it in the mainland.

 

Btw, in PR, I think the asset tax is partially deductible against the corporate income tax, so if they implement it here net effect might not be 15% on JPM.

[damianolive]

JPM's earnings are higher than the $18BL implied in the article (closer to $22.5BL). Considering the real earnings power and the  fact at that the asset tax would be a deductible expense, the impact on net income is around 8%. The proposal includes lowering the nominal tax rates - if it goes down by 5 percentage points (35 to 30%) the impact of all of this would be very small for JPM.

[Rabbitisrich]

If the government wants to tax big banks, then they should just do it without this foo foo systematic risk nonsense. People focus too much upon idiosyncratic risks, and use metrics like banking asset concentration as if the legal container is important. What's funny is that we saw TARP announced in late 2008, only to be followed by drops in industrial production, inflation expectations, and GDP. Yet, "bank bailout" is still a term. It should be called the nominal expectations bailout!