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Financial Planning > Tax Planning > Tax Reform

Senator Brown Scuttles Reform Bill Deal, Forcing Lawmakers Back to Conference

By Melanie Waddell

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Top Democratic negotiators reopened negotiations on the financial services reform bill Tuesday, June 29, to remove a $19 billion tax on big banks and hedge funds that Republican Senator Scott Brown of Massachusetts said he could not support.

Brown told Senator Christopher Dodd (D-Connecticut) and Rep. Barney Frank (D-Massachusetts) in a letter that he would vote against passage of the Wall Street reform bill if they did not remove the $19 billion tax on big banks that was added during the conference committee, which approved the bill on June 25.

“This tax,” Brown wrote, “was not included in the Senate bill, which I supported. If the final bill contains these higher taxes, I will not support it.”

As written, the tax was set to be imposed on all financial companies with more than $50 billion in assets, including large hedge funds and insurance companies. Published reports say that if the tax is deleted from the bill an alternative would be to consider raising banks’ federal deposit insurance fees and possibly tapping the $700 billion Troubled Asset Relief Program (TARP).

The House is still scheduled to vote on the bill on Wednesday, June 30, as they want to break on Thursday and Friday to honor Senator Robert Byrd’s death.

Byrd died on the morning of June 28; Democrats need at least four Republicans to vote for the bill because Byrd’s death left them with only 56 of the 60 votes needed to pass the bill. Two Democrats, Senators Maria Cantwell (D-Washington), and Russ Feingold (D-Wisconsin), plan to vote “no” on the reform bill.

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