
James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comFirm Insights
Author: James F. McDonough
Date: February 3, 2015

Of Counsel
732-568-8360 jmcdonough@sh-law.comThe 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.
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.
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.
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.

Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Author: George McGowan

Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Author: Marc J. Comer

For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
Author: Marc J. Comer

For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Author: George McGowan

In today’s digital economy, New Jersey businesses of all sizes rely heavily on technology vendors, software providers, cloud platforms, and managed IT services. Whether your company is purchasing software, migrating data to the cloud, engaging a cybersecurity consultant, or entering into a long-term managed services agreement, a careful IT contract review can have significant operational, […]
Author: George McGowan

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
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
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!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!