Don't Mess With Taxes

A letter is circulating as part of an effort to get Congress to halt and reverse the now infamous bank loss rule.

As you probably recall since I've blogged about it quite a bit, the tax code was changed as part of emergency stimulus, aka bailout, efforts. Now some banks that buy floundering financial institutions can simply ignore the tax law that prevents them from using the losses of the acquired banks to help reduce their, the buying banks', tax bills.

Several members of the House and Senate tax-writing committees have introduced legislation to stop this special tax break (blogged about here) and also have directly written the man who initiated the change, Treasury Secretary Henry Paulson (blogged here).

Now advocacy groups and other tax- and budget-related organizations are joining the effort to get the bills enacted. They are signing a letter (you can see a PDF copy, including who has signed so far, by clicking here) that asks lawmakers to cosponsor the recently-introduced legislation that would reverse the Treasury edict.

States joining the recall effort: Among the signers are many state groups. While the law change is estimated to cost the federal government $140 billion in revenue, state treasuries also are in trouble because states tend to have business tax systems that are linked to the federal corporate tax.

"California, for example, will reportedly lose $2 billion if the Treasury notice is allowed to stand," according to the letter. "This is particularly problematic because many state legislatures face procedural obstacles to enacting any legislation that would increase revenues to make up for this unexpected corporate tax cut."

If you're an official representative of a group that would like to be added to the signatories, you can e-sign the letter by clicking here.

You can sign, too! Individual taxpayers, who are footing this and other bailout bill provisions, also can get in on the act.

Citizens for Tax Justice has created a similar letter for individuals to sign and send to Congress simply by filling out a form at this special Web page.