Trade Groups Send Letter to Chairman Camp Opposing Lending Tax in Tax Reform Proposal

February 26, 2014

Washington, D.C. (February 26, 2014) – Today, the American Bankers Association, the Consumer Bankers Association, the Financial Services Forum, Financial Services Roundtable, the Independent Community Bankers of America, the Institute of International Finance, the Mortgage Bankers Association, the Property Casualty Insurers Association of America, the Securities Industry and Financial Markets Association, The Clearing House Association, and the U.S. Chamber of Commerce Center for Capital Markets Competitiveness sent a letter to House Ways and Means Committee Chairman Dave Camp (R-MI) opposing the new lending tax on financial institutions included in Camp’s tax reform discussion draft.  The text of the letter follows and is linked:

The Honorable Dave Camp

Chairman, Committee on Ways and Means

U.S. House of Representatives

1102 Longworth House Office Building

Washington, D.C. 20515

Dear Chairman Camp:

The undersigned organizations and institutions represent the economic and commercial interests of hundreds of thousands of businesses, small and large, from all sectors of the economy, employing tens of millions of American workers.  We strongly support your goal to achieve comprehensive tax reform and thank you for your efforts to date.  However, in keeping with our support for pro-growth tax reform, we write to strongly oppose the imposition of any arbitrary new tax on financial institutions.  A targeted tax on financial institutions, regardless of form or motivation, is misguided and utterly at odds with the fundamental objective of comprehensive tax reform.  The assessment will penalize customers, employees, and investors, increase the cost of capital for American businesses, and undermine the competitiveness of America’s financial sector -- all of which will adversely impact economic growth and job creation.  

A specific tax imposed on a single industry sector is wholly inconsistent with the fundamental purpose of tax reform -- to broaden the tax base, lower rates, simplify the code, and reduce economic distortions that impede growth. As a glaring diversion from that broad objective, a financial institution tax undermines the compelling logic of, and argument for, tax reform, jeopardizing the broad consensus necessary to achieve that important goal. It is no better to drive capital away from certain industries or sectors than it is to divert capital to favored industries through special tax breaks.   

Moreover, a tax on financial institutions would amount to a levy on lending, retirement savings, credit allocation, and financial services to businesses, households, municipalities, and investors with the effect of reducing availability and increasing costs.  In a letter to Senator Charles Grassley dated March 4, 2010 regarding a previous financial tax proposal, Congressional Budget Office Director Doug Elmendorf underscored these very real concerns.  The tax would undermine economic growth and job creation at a time when growth remains subpar and more than 20 million Americans remain either out of work or underemployed.  

CBO Director Elmendorf also noted that: “[T]he cost of the proposed fee would ultimately be borne to varying degrees by an institution’s customers, employees, and investors.”  In other words, the assessment would really be a tax on average Americans.

Finally, in an increasingly competitive global economy, it is vital that U.S. financial markets and their participants remain competitive at home and abroad.  A tax on financial institutions risks driving capital formation and allocation overseas, to the detriment of American businesses, workers, and households.  The proposal undermines the global competitiveness of a significant sector of the U.S. economy while a comprehensive tax reform bill should do the exact opposite.

Authentic, pro-growth tax reform cannot entail unintended consequences that would undermine economic growth, job creation, and America's international competitiveness.  For these reasons, we respectfully request that any new targeted tax on financial institutions be rejected.

Sincerely,

American Bankers Association

Consumer Bankers Association

Financial Services Forum

Financial Services Roundtable

Independent Community Bankers of America 

Institute of International Finance

Mortgage Bankers Association

Property Casualty Insurers Association of America

Securities Industry and Financial Markets Association

The Clearing House Association

U.S. Chamber of Commerce Center for Capital Markets Competitiveness

Cc: House Republican Leadership and Ways & Means Committee Members

Download the full letter.

American Bankers Association

The American Bankers Association represents banks of all sizes and charters and is the voice for the nation’s $14 trillion banking industry and its two million employees.  Learn more at aba.com
Consumer Bankers Association

The Consumer Bankers Association (CBA) is the trade association for today's leaders in retail banking - banking services geared toward consumers and small businesses. The nation's largest financial institutions, as well as many regional banks, are CBA corporate members, collectively holding two-thirds of the industry's total assets. CBA’s mission is to preserve and promote the retail banking industry as it strives to fulfill the financial needs of the American consumer and small business.

The Financial Services Forum 

The Financial Services Forum is a non-partisan financial and economic policy organization comprising the CEOs of 18 of the largest and most diversified financial services institutions doing business in the United States. The purpose of the Forum is to pursue policies that encourage savings and investment, promote an open and competitive global marketplace, and ensure the opportunity of people everywhere to participate fully and productively in the 21st-century global economy.  For more information, visit www.financialservicesforum.org 

Financial Services Roundtable

Financial Services Roundtable represents 100 of the largest integrated financial services companies providing banking, insurance, and investment products and services to the American consumer. Member companies participate through the Chief Executive Officer and other senior executives nominated by the CEO. Roundtable member companies provide fuel for America’s economic engine, accounting directly for $92.7 trillion in managed assets, $1.2 trillion in revenue, and 2.3 million jobs. For more information, visit FSRoundtable.org

Independent Community Bankers of America

The Independent Community Bankers of America®, the nation’s voice for nearly 7,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit www.icba.org

The Institute of International Finance

The Institute of International Finance is the global association for the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership IIF counts leading global banks, insurers, pension funds, asset managers and sovereign wealth funds, as well as leading law firms and consultancies. For more information visit www.iif.com

Mortgage Bankers Association

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, REITs, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mba.org

Property Casualty Insurers Association of America (PCIAA)

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $195 billion in annual premium, 39 percent of the nation’s property casualty insurance. Member companies write 46 percent of the U.S. automobile insurance market, 32 percent of the homeowners market, 37 percent of the commercial property and liability market, and 41 percent of the private workers compensation market.

Securities Industry and Financial Markets Association

The Securities Industry and Financial Markets Association (SIFMA) brings together the shared interests of hundreds of securities firms, banks and asset managers. SIFMA's mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org 

The Clearing House Association

Established in 1853, The Clearing House is the oldest banking association and payments company in the United States. It is owned by the world's largest commercial banks, which collectively employ more than two million people and hold more than half of all U.S. deposits. The Clearing House Association L.L.C. is a nonpartisan advocacy organization representing – through regulatory comment letters, amicus briefs, and white papers – the interests of its owner banks on a variety of critically important banking issues. The Clearing House Payments Company L.L.C. provides payment, clearing, and settlement services to its member banks and other financial institutions, clearing almost $2 trillion daily and representing nearly half of the automated-clearing-house, funds-transfer, and check-image payments made in the U.S. 

U.S. Chamber of Commerce Center for Capital Markets Competitiveness

Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.