New York State Lawmakers Claim Bank Tax ‘Would Make New Yorkers Pay For The Sins Of Detroit’

Rep. Peter King (R-NY)

Rep. Peter King (R-NY)

Tomorrow, the Senate Finance Committee is scheduled to hold a hearing on the Obama administration’s proposed bank tax, with testimony from Treasury Secretary Tim Geithner and a variety of industry lobbyists, including Steve Bartlett, president of the Financial Services Roundtable, who has said that the bank tax is “one of the more bizarre, punitive taxes I’ve ever seen.”

Of course, it makes sense that the financial industry is fighting efforts at new taxation. But today, a group of New York state lawmakers joined the big banks’ effort, and penned a letter to Rep. Peter King (R-NY) to ask that he oppose a bank tax because it “would make New Yorkers pay for the sins of Detroit”:

The lawmakers are telling Congress the president’s plan, “would make New Yorkers pay for the sins of Detroit”…10 members of the New York State Assembly are urging Congress against the proposal, saying the tax, “is loaded against New York because we are where the vast majority of affected financial institutions have their largest employment and profit centers.” The letter is signed by Darryl Towns, Jose Peralta, Michael Gianaris, Jonathan Bing, Vanessa Gibson, Adriano Espaillat, Adam Clayton Powell, Carl Heastie, Sam Hoyt and Marcos Crespo.

This shows, once again, the folly of the administration portraying the bank tax solely as a means of recouping losses from the Troubled Asset Relief Program (TARP) — which are largely the result of AIG and the auto companies, not the banks — instead of as a way to make the banking sector pay for the variety of guarantees it received during the financial crisis and beginning to even the playing field between big and small banks. The New York lawmakers chose the obvious rejoinder to a tax framed that way.

They also chose a proper advocate for their viewpoint by sending their letter to King, as he is staunchly opposed to the bank tax. Not only has he made significant noise about financial regulatory reform placing an “unnecessary burden” on Wall Street banks, but he personally organized a Chamber of Commerce backed effort to kill the bank tax outright earlier this year.

Fortunately, not all New York lawmakers feel the same way about the bank tax. Sen. Charles Schumer (D-NY) has said that “I think the administration’s proposal is a common-sense way to make sure that money should be repaid, and I believe it should be included in financial reform legislation to be considered on the Senate floor.” And Schumer has a growing consensus on his side.