A Democratic state lawmaker from Buffalo is urging U.S. Sen. Charles Schumer to oppose President Obama’s proposed tax on financial institutions.

Assemblyman Sam Hoyt says he believes the tax, which Obama calls a “Financial Crisis Responsibility Fee” (FCRF) “will harm the banking industry’s ability to provide credit market services, which will in turn impair financial recovery.”  Banking is a major employer in Buffalo, where HSBC and M&T Bank have corporate offices.

Hoyt’s money graf:

As you know, the FCRF would impose a .15 percent tax on the covered liabilities of banks and other financial institutions. This punitive tax would negatively impact the ability to leverage capital for private-sector business, which will in turn damage employment and investment conditions. A stronger focus on collecting outstanding Troubled Asset Relief Program (TARP) funds appears to be a more reasonable option. As New York State struggles with the worst financial crisis since the Great Depression, wrestling with a multi-billion dollar state deficit that has ballooned largely because of the state’s position as the center of the banking industry, it is imperative that the financial sector be given every opportunity to rebound. The FCRF is no such opportunity for growth.

Schumer, however, has come out in favor of the bank tax. Sen. Kirsten Gillibrand has said she is “concerned” about the tax, but her position otherwise seems unclear.  As this recent Times story noted: “The senator has yet to say whether she supports or opposes the Obama proposal, even as her potential rival for the Democratic nomination, Harold E. Ford Jr., positions himself as a defender of Wall Street, where he is getting much of his initial support. Instead, Ms. Gillibrand has proposed giving banks a break on the tax based on how many loans they provide to small businesses.”

Hoyt’s letter is posted here.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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