New York lawmakers cry foul over Obama's bank tax plan

Washington: Two New York congressmen are asking other lawmakers in their state delegation to oppose President Barack Obama's proposed tax on the biggest financial companies, arguing that the fee could have a "crippling effect" on the region.

Representatives Peter King, a Republican, and Michael McMahon, a Democrat, are asking their colleagues to sign a letter to the president that voices "strong opposition" to the fee. Obama proposed the tax on January 14, saying it was designed to get back "every single dime" that taxpayers spent in bailing out the financial industry.

"This bank tax will have a devastating effect on New York's financial industry, economy and residents," a draft copy of the letter, obtained by Bloomberg News, states.

In the letter, the lawmakers said that the proposed fee, which Obama is expected to include in his fiscal 2011 budget to be announced this week, would be paid disproportionately by New York financial companies, with some having to pay more than $1.5 billion apiece.

Budget crisis

They said the fee comes at a time when the state is already experiencing a budget crisis.

"Your bank tax will restrict access to capital for New York's small businesses and other job creators," King and McMahon wrote. "In addition, the bank tax could jeopardise the jobs of the thousands of people who are employed by these large financial institutions."

Lauren Amendolara, a spokeswoman for McMahon, said that he and King would make a formal announcement about the letter.

The fee would apply to financial companies with assets of more than $50 billion. It would be based on bank liabilities and imposed starting June 30 on companies such as Citigroup, American International Group and Bank of America.

The administration estimates the levy will raise $90 billion over 10 years and $117 billion over 12 years.