Why We Need a Bank Tax

There will be future bailouts, so make banks pay their share
By Jane Yager,  Newser Staff
Posted Apr 28, 2010 9:59 AM CDT
In this Feb. 22, 2010, file photo Senate Finance Committee Chairman Max Baucus, D-Mont., arrives on Capitol Hill in Washington. Baucus expects a bank tax to be passed.   (AP Photo/Harry Hamburg, File)

(Newser) – The recent financial crisis wasn't the first time banks needed a taxpayer bailout, and it won't be the last. That's why a bank tax is the best way to protect taxpayers from the cost of future crises, David Leonhardt writes in the New York Times—better than the current Senate financial regulation bill. "A bank tax is akin to an insurance policy that taxpayers would require Wall Street to hold," Leonhardt argues. "The premiums on that policy would keep Wall Street from making big profits in good times while foisting its losses on society in bad."

Though the White House prefers a post-crisis tax, the IMF is pushing for a permanent bank tax, and Treasury Secretary Timothy Geithner told Leonhardt he's open to the idea. And the tax "is not just about punishing banks," Leonhardt notes—it's also a fitting way to pay off the federal deficit: "Can you think of a better candidate for taxation than an industry that made huge profits during the boom and then helped cause the bust that has sent the deficit soaring?"

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