The Obama Administration wants the deficit reduction legislation produced by the Joint Select Committee on Deficit Reduction created by the Budget Control Act to include a Financial Crisis Responsibility Fee on the largest financial institutions to fully compensate taxpayers for the extraordinary support they provided to the financial sector through the Troubled Asset Relief Program (TARP). The Administration also seeks the repeal of the LIFO accounting system used by public reporting companies. The assistance given to the largest financial firms represented an extraordinary step that no one wanted to take, said the White House, but one that was necessary in order to stem a deeper financial crisis and set the economy on a path to recovery. The cost associated with the excessive risk-taking by the largest financial institutions continues to ripple through the economy, said the Administration, although many of the largest financial firms have repaid the Treasury for their TARP assistance, they continue to implicitly benefit from the TARP funds that bolstered their balance sheets during a period of great economic upheaval. The fee will be restricted to financial firms with assets over $50 billion and will be imposed until all TARP costs have been recouped. The Administration's Financial Crisis Responsibility Fee is designed to align with the congressional intent of the TARP legislation that requires the President to propose a way for the financial sector to pay back taxpayers. The structure of this fee would also be consistent with principles agreed to by the G-20 Leaders and similar to fees proposed by other countries. This fee will reduce the deficit by $30 billion over 10 years. As first proposed by the Administration last year, the fee would be levied on the debts of financial firms with more than $50 billion in consolidated assets, providing a deterrent against excessive leverage for the largest financial firms. By levying a fee on the liabilities of the largest firms , excluding FDIC-assessed deposits and insurance policy reserves, the Financial Crisis Responsibility Fee will place its heaviest burden on the largest firms that have taken on the most debt. Covered liabilities would be reported by regulators, but the fee would be collected by the IRS and revenues would be contributed to the general fund to reduce the deficit. The Administration will also work with Congress and regulatory agencies in order to design protections against avoidance by covered firms. The Administration also ask for the repeal of the last-in, first-out (LIFO) method of accounting for inventories. Under the LIFO method of accounting for inventories, the cost of the items of inventory that are sold is equal to the cost of the items of inventory that were most recently purchased or produced. For many businesses where the price of goods in inventory rise over time, like oil and gas companies, the LIFO approach allows firms to artificially lower their tax liability, The President's proposal would repeal the use of the LIFO accounting method for Federal tax purposes, effective for taxable years beginning after December 31, 2012. Assuming inventory costs rise over time, taxpayers required to change from the LIFO method under the proposal generally would experience a permanent reduction in their deductions for cost of goods sold and a corresponding increase in their annual taxable income as older, cheaper inventory is taken into account in computing taxable income. Taxpayers required to change from the LIFO method also would be required to report their beginning-of-year inventory at its first-in, first-out (FIFO) value in the year of change, causing a one-time increase in taxable income that would be recognized ratably over 10 years. This would reduce the deficit by $52 billion over 10 years.
Read more detail on Recent Securities Law Posts –Legal notice about the Obama Administration Says Deficit Reduction Should Include Financial Crisis Responsibility Fee and End LIFO Accounting rubric : Hukuki Net Legal News is not responsible for the privacy statements or other content from Web sites outside of the Hukuki.net site. Please refer the progenitor link to check the legal entity of this resource hereinabove.
Do you need High Quality Legal documents or forms related to Obama Administration Says Deficit Reduction Should Include Financial Crisis Responsibility Fee and End LIFO Accounting?