The Senate Finance Committee holds a hearing today on The President’s Proposed Fee on Financial Institutions Regarding TARP:

Senate Finance Committee Chairman Max Baucus (D-Mont.) will convene the first in a series of hearings to consider a proposed tax on large financial institutions, commonly referred to as the bank tax, at 10 a.m. on Tuesday, April 20, in Room 215 of the Dirksen Senate Office Building. The bank tax has been proposed to recover losses from the Troubled Asset Relief Program (TARP), which helped to stabilize our economy during the economic crisis. Baucus plans to convene a series of hearings to explore potential structures of a bank tax along with the impact of a bank tax, including the effect on the economy.

Tuesday’s hearing, entitled, “The President’s Proposed Fee on Financial Institutions Regarding TARP: Part 1,” will consider how the TARP program helped to stabilize the financial sector and why some funds may not be able to be repaid. As part of his consideration of the proposed tax, Baucus will question the TARP program’s Special Inspector General, Neil Barofsky, on the economic benefits of the TARP program, who received TARP funds and efforts to recover losses from the program.

In connection with the hearing, the Joint Committee on Taxation has released Background and Issues Related to the Administration’s Proposed Tax on Financial Institutions (JCX-26-10):

This document … provides a discussion of Federal income tax issues related to the Administration’s financial crisis responsibility fee and, more generally, sector-specific taxes on financial institutions. … Part One provides general background related to the recent financial crisis, the Federal government’s response, and an overview of financial institutions. Part Two describes present law related to the Federal income taxation of financial institutions including banks, thrifts, bank and thrift holding companies, credit unions, insurance companies, securities broker-dealers, and certain other financial institutions. Part Three describes the Administration’s proposed financial crisis responsibility fee. Part Four provides a discussion of the basic design considerations for crafting a sector-specific tax on financial institutions and a description and analysis of possible bank tax alternatives.