Inside Financial Services

The Democrats’ Proposed “Fee” On Lenders Is Really A Tax

The Democrats try to stick it to the middle class without anyone noticing.

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Senate Democrats now want to “pay for” their proposed cut in the payroll tax with, among other things, higher fees from mortgage lenders to Fannie and Freddie.

Seriously? The Democrats must understand-they have to-that higher fees to the GSEs are just a stealth tax hike, and one, in this case, aimed at a sector of the economy that can least afford to pay it. Those fees will simply be passed along to borrowers by the banks in the form of higher interest rates or closing costs. In the end, the fees will be paid by individuals, just like every other tax is. Even worse, the new tax would hit the middle class especially hard-the same middle class that the Democrats keep insisting they’re the champions of. Insane.

And don’t argue, by the way, that this new GSE fee wouldn’t really be a tax, strictly speaking, since if people don’t want to pay it, they don’t have to buy a house or refinance their mortgage. Are you kidding me? If the economic recovery is ever going to gather steam, it will be because people start buying houses and so help revive the housing market, and refinance their mortgages so that they have more money to spend. And the Democrats want to make that harder to do?

If the Democrats in the Senate want to cut the payroll tax, they should offset the lost revenue the way private businesses do every day when they’re faced with a shortfall: they should cut spending elsewhere.

What do you think? Let me know!

15 Responses to “The Democrats’ Proposed “Fee” On Lenders Is Really A Tax”

  1. Whitney

    Tom,

    Give em Hell, those Dems don’t stop at anything.

  2. jarvis

    The GSE loans are being subsidized by the other taxpayers, so why not raise the money? If I read the proposal correctly, 1/8 in interest rate will not impact the purchase market. It will slightly impede the refi market. At some point the Federal govnt has to let private lending fund the housing market.

  3. jarvis

    The GSE loans are being subsidized by the other taxpayers, so why not raise the money? If I read the proposal correctly, 1/8 in interest rate will not impact the purchase market. It will slightly impede the refi market. At some point the Federal govnt has to let private lending fund the housing market.

  4. jarvis

    The GSE loans are being subsidized by the other taxpayers, so why not raise the money? If I read the proposal correctly, 1/8 in interest rate will not impact the purchase market. It will slightly impede the refi market. At some point the Federal govnt has to let private lending fund the housing market.

  5. ex merger guy

    I have never seen an operation where 20- 30% could be cut immediately – most would go 50%. I betcha I could get 20% out of Congress as well as installing zero based budgeting, accrual accounting and putting sigma 7 on the boiler.

  6. Richie Rich

    Tom, your argument is simply too logical for Democrats these days – logic is the enemy for them. They still seem to believe that there is no impact to the economy regardless of what tax rates look like.

  7. Tom S

    If they won’t call their new stimulus bill a stimulus bill or their payroll tax cut a social security raid why would thay consider this a tax hike? What Bank of America should have done when they imposed a 5 dollar fee for debit cards is call it a 5 dollar tax increase and the Dems would have loved it!!

  8. Taxes should rise

    But you’re right, this is not the place to offset lost revenue. Why not tax carried interest as income?

  9. JimBills

    Actually, it’s worse. These fees will have the effect of pushing more loans to the FHA rather than generate much revenue at the GSEs. So, this has the effect of not covering the the revenue hole they are claiming it will while at the same time increasing the risk of mortgage loses being born by the taxpayer thru the FHA. Unbelievably stupid.

  10. Larry Horan former Smith Barney colleague

    What do you expect from the Dumbocrats.

  11. Allan

    Maybe the Democrats should adopt the Republican idea to eliminate the mortgage interest deduction.

  12. sgrbear

    Yes..the Democrats are good for increasing spending without accountabilty…..and the Republicans are for reducing spending without tax increases….no trust….somewhere in the middle ls the truth…

  13. DrRoberts

    Why would one be surprised by this latest crackpot idea from the party that saddled the economy with Dodd-Frank?

  14. Common Sense

    Why won’t the tax just cut into banks margins and ROEs instead of being passed on to the consumer?

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