Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

New Tax For Finance Firms Proposed By Obama

Author: James F. McDonough

Date: February 3, 2015

Key Contacts

Back

Pres. Barack Obama proposed a new tax on financial institutions during his State of the Union Address earlier in January.

The new tax policy, which would levy a seven-point basis fee on the total liabilities of roughly 100 financial firms with more than $50 billion in assets, would generate an estimated $110 billion in tax revenue over the course of 10 years, according to Bloomberg.

Broader approach

While the president suggested a similar tax in the past, the new policy would affect a broader array of financial institutions such as insurance companies and asset managers, a senior administration official told the news source. Because of this more expansive tax base, the new proposal would raise around twice as much money while at the same time imposing a lower rate on industry participants.

The financial institutions that would need to pay this new tax fall under the description of “too big too fail,” meaning that their vast size provides them with both lower borrowing costs and also insurance that they will receive bailout money if needed, since their dissolution could help trigger the financial system’s collapse, noted Forbes contributor Tim Worstall.

While their key role ensures these financial institutions receive protection from the federal government, these companies are not actively paying for their insurance, stated Worstall, who currently serves as a fellow at the Adam Smith Institute and has published in a wide range of venues.

Managing risk

While the average taxpayer might feel comfort that the largest U.S. banks are insulated from failing completely, they might not be so enthused if they need to foot the bill. This taxpayer might be happy to know that many predict the new policy could give major banks less incentive to take big risks, CNNMoney reported.

The White House has stated that the proposed tax would “make it more costly for the largest financial firms to finance their activities by borrowing heavily,” according to the news source. However, there are some fine points that need to be clarified. While the proposal stated it would affect liabilities, simply targeting all liabilities could prompt banks to originate fewer loans.

Moving forward

Obama has indicated that if he succeeded in obtaining the tax revenue from this proposal, he would use the money to expand tax benefits that would affect the middle class, including credits for child care and higher education, Bloomberg reported. These efforts dovetail with his recently announced plans to work with Congress to provide community college education free to millions of students.

“What you’re seeing here is really dedicated middle-class tax relief to really get at that problem of middle-class wage stagnation,” stated Harry Stein, who works with the Center for American Progress as the director of fiscal policy, according to the news source.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
New York NDA Requirements for Businesses post image

New York NDA Requirements for Businesses

Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]

Author: Dan Brecher

Link to post with title - "New York NDA Requirements for Businesses"
New Jersey Will Contest Grounds Explained post image

New Jersey Will Contest Grounds Explained

How Courts Evaluate Testamentary Capacity and Undue Influence Will contests in New Jersey are difficult to win, given the strong presumption that a properly executed will reflects the testator’s intent. However, challenges based on lack of testamentary capacity and undue influence remain common, particularly where there are concerns about mental capacity or the involvement of […]

Author: Marc J. Comer

Link to post with title - "New Jersey Will Contest Grounds Explained"
Legal Issues Before Bringing on Investors post image

Legal Issues Before Bringing on Investors

Bringing on outside investors can provide the capital and strategic support a business needs to grow. However, raising capital also introduces important legal, financial, and operational considerations. Before bringing on investors, businesses should address key legal issues to reduce risk, streamline investor due diligence, and position the company for long-term success. Early preparation signals that […]

Author: Dan Brecher

Link to post with title - "Legal Issues Before Bringing on Investors"
SECURE 2.0 RMD Planning Strategies post image

SECURE 2.0 RMD Planning Strategies

How the Updated Law Shapes Retirement and Estate Planning The SECURE 2.0 Act of 2022 materially reshapes the required minimum distribution (RMD) landscape, extending tax deferral opportunities while accelerating distribution requirements for many beneficiaries. For high-net-worth individuals and families, these changes are not merely technical. They require a reassessment of retirement income strategies, beneficiary planning, […]

Author: Marc J. Comer

Link to post with title - "SECURE 2.0 RMD Planning Strategies"
Buying Commercial Property in New Jersey: Legal Guide for Small Businesses post image

Buying Commercial Property in New Jersey: Legal Guide for Small Businesses

Small businesses considering buying commercial property in New Jersey must evaluate a range of legal, financial, and operational factors. While ownership can offer long-term value and control, it also introduces significant risks if not properly structured. This guide outlines key considerations to help New Jersey business owners make informed decisions, minimize legal exposure, and successfully […]

Author: Robert L. Baker, Jr.

Link to post with title - "Buying Commercial Property in New Jersey: Legal Guide for Small Businesses"
The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities post image

The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities

On January 28, 2026, staff of the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how existing federal securities laws apply to tokenized securities. The SEC’s “Statement on Tokenized Securities” does not establish new law, but it does provide greater clarity on the […]

Author: Dan Brecher

Link to post with title - "The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!