Opposition growing among banks, lawmakers to Camp tax reform proposal
Primary focus on the excise tax on financial firms
Banking associations, leading financial institutions and now a number of House Republicans are coming out with grave concerns and – in the case of some big banks – outright if still quiet opposition to a comprehensive tax overhaul being proposed by the head of the House Ways and Means Committee.
The latest group joining the opposition, 54 House Republicans, is notable since because the tax reform plan is being floated by the Republican chairman of the Ways and Means Committee.
“While we support the objectives of broad tax reform, we have concerns about the impact that a tax on lending institutions would have the availability and cost of credit,” said David Stevens, president and CEO of the Mortgage Bankers Association. “The housing market is still in recovery mode, a recovery that could be put in jeopardy by any further tightening of credit.”
At issue is the excise tax on financial institutions. U.S. Rep. Dave Camp, R-Mich., unveiled his Tax Reform Act of 2014 in late February, and critics say it could drastically increase taxes on homeowners and homebuyers, and which would levy a new lending tax on financial institutions. Supporters say the tax reform bill would drastically simplify the Brobdinaggian U.S. tax code.
Bank of America (BAC), Goldman Sachs (GS), JPMorgan Chase & Co. (JPM)) and others are, sources say, starting to plan strategies to pressure GOP lawmakers, including withholding campaign contributions even as they lobby lawmakers to resist that excise tax in particular.
The Wall Street Journal reported on Monday that Goldman Sachs was putting a hold on plans to hold a fundraiser for the National Republican Congressional Committee “because of concerns about Mr. Camp's bank-tax proposal.”
The letter from the 54 Republican lawmakers is the latest salvo in a conflict escalating unexpectedly. The letter, wherein signatories say they welcome Camp’s overall approach but have concerns about the financial institution excise tax, can be read here.
“In keeping with our support for pro-growth reform, we strongly oppose the new lending tax on financial institutions that is included in the Chairman’s proposal. Such a tax will hurt economic growth and job creation by increasing the cost of capital for American families and business, and undermining U.S. global financial competitiveness. Furthermore, a tax that singles out one specific industry is utterly inconsistent with the fundamental goals of tax reform to lower rates, broaden the base, and remove industry specific treatments,” said Financial Services Forum president and CEO Rob Nichols.
“We strongly urge policymakers to reject this arbitrary lending tax and instead place their focus on achieving pro-growth tax reform with policies that increase economic growth and expand access to sound lending and credit,” Nichols said.
Capitol Hill watchers say initially it was believed that Camp’s tax reform plan, while it has merits, had little or no chance of getting beyond the House at best.
However, the plan has begun to receive more broad and bipartisan support, even though most in Washington don’t expect the reform bill to come into play until after the 2014 mid-term election.