The Financial Crisis Responsibility Fee

I've nosed around a bit to understand how the proposed "Financial Crisis Responsibility Fee" is supposed to work. Basically, it is a tax of 0.15% per year on the uninsured liablities of large financial institutions (those at risk of being bailed out because they are too big to fail).

Structurally, this has a lot to recommend it. It lacks the problems associated with proposals like a per transaction tax, income taxes, and taxes based on gross or net revenues, all of which require immense detail in order to determine total liability. instead, it is basically similar in concept to a property tax. But, the taxed property is a tax base (intangible property) that is not usually taxed by property taxes imposed by state and local government, or by the federal government.

The amount due is fairly easy to calculated from available data, and involved a small universal of potential taxpayers, so the cost of collection and the potential for maninpulating the data is low. The tax is a quasi-user's fee, i.e. it bears a rough justice relationship to the public burden that the company imposes. It rewards banks that avoid risk. It doesn't mandate that banks have any particular capital structure, it just tips the scales a little. It doesn't subsidize excessive expenses, or losses, the way that an income on corporate profits does. It prevents the embarassment of huge companies that impose a significant financial burden on government paying no entity level taxes. It creates incentives only related to the riskiness of the bank's capital structure, rather than a wide array of bank decisions (which a corporate income tax would).

It resembles another interesting proposal to replace the corporate income tax entirely, which would impose an excise tax on the publicly held market capitalization of a firm (stocks and bonds) rather than its profits. This reflects the reality that privately held companies can pay no corporate income tax with minimal tax planning effort, which makes the corporate income tax effectively a tax on the privilege of being publicly traded, by linking the privilege that is being taxed to the means of tax calculation.