Tax Analysts Blog

Should the Government Tax Companies It Bails Out?

Posted on Feb 28, 2012

During the thrift crisis of the 1980s the government poured tens of billions into failing thrift institutions. This was followed by a huge debate about whether tax benefits given to those firms should be revoked.

Now we have another crisis and the same issue arises. After the TARP funds saved the banks, Obama wants a new tax on banks for repayment of the tax. Should we be coddling or soaking the banks?

Today's papers provide a neat contrast between the UK and US approaches to simultaneous taxing and subsidizing of banks. The Financial Times reports how the UK Treasury wants to limit Barclay's aggressive tax planning. In the New York Times Andrew Ross Sorkin discusses how during the crisis the US Treasury issued a favorable ruling that pumped billions of tax benefits into failing firms.

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