A front-page news article in the Wall Street Journal is careful to use only the word "fee," and not the word "tax" to refer to the idea of taxing bank liabilities or profits. The Journal doesn't describe why this is a "fee" and not a "tax." Elsewhere in today's Journal, the paper doesn't shy away from using the word "tax" to describe a proposal to extend an increased Medicare tax, which is now levied only on payroll income, to include "dividends and other income from investments." Why not call it a Medicare "fee"? The Tax Foundation's tax policy blog has a quick description, in another context, of the difference between a tax and a fee. The Tax Foundation says:
If it were up to legislatures, few things would be called "taxes," and loose definitions help deprive taxpayer protection provisions of any meaning.
A fee funds services directed at those who pay it, or pays for regulating their conduct. Taxes produce surplus revenue for general government programs....Because American antipathy to taxes is so deeply rooted in our nation's history, lawmakers often seek to raise revenue in ways to avoid the "tax hiker" label even if it requires calling an obvious tax a "fee." That's what's happening here. These shell games undermine transparency by making it harder for citizens to understand the cost of government.
One can argue that a tax on the banks to pay for TARP is a fee because it "funds services directed at those who pay it." The Medicare tax, on the other hand, is going to pay for health care not just for payers of the expanded tax, but for other taxpayers as well. So maybe the Journal has the fee/tax distinction correct in this case. Banks, on the other hand, will argue that they've already paid back their part of TARP, and that exacting a fee from the ones who have already paid the TARP money back to cover the costs of those who haven't paid it back is a tax, not a fee. Anyway, it would have been nice to have some explanation of this fee/tax distinction in either one of the Journal articles. Otherwise the reader's imagination is tempted to speculate about reasons. Maybe the Obama administration agreed to confirm the news to the Journal on the condition that the newspaper referred to the tax as a fee?
The New York Times takes a stand and, in its news article about the fee/tax on the banks, isn't shy about using the word tax: "The most likely alternatives would be a tax based on the size and riskiness of an institution's loans and other financial holdings, or a tax on profits." The Wall Street Journal, on the other hand, conveys the same information without using the term "tax": :One option under consideration involves placing a fee on a bank's liabilities, a number that theoretically represents the amount of risk a bank takes on, according to officials familiar with the matter. That approach would also have the effect of tamping down banks' risky behavior, another administration goal. Another option would be to target bank profits, these people said."