Tax Rascal

How Much Of Citi Did We Already Own?

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Congratulations: you, the taxpayer, now own even more of what used to be America’s biggest bank. That’s right: the government is once again raising its stake in Citigroup by switching from preferred stock (which pays a high dividend, and is basically like a bond) to common stock (which is closer to just owning part of the business).

So, in theory, We The People own 36% of Citibank. And this is considered very big news.

But is it? Consider how much the government is already involved in Citi:

  • Most of Citibank’s deposits are guaranteed by the FDIC. Which means that when you deposit money at Citibank, you’re really lending it to the government, which is lending the money back to Citibank.

Tax Q&A: Who Pays for the Bailout, and How?

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$700 billion. It’s an incredible number. The Troubled Asset Relief program (abbreviated TARP, often just called “The Bailout”) is an unprecedented spending spree. The closest comparison, the Marshall Plan, cost about $110 billion in present dollars, so the scope of the TARP is beyond that of any new government program.

When people hear about $700 billion in new spending, their first reaction after scraping their jaw off the floor is to ask: “Who will pay for this?” with the sneaking suspicion that the answer is, as usual, “The taxpayers.”

But it’s not that simple. The first important thing to realize about paying for the bailout is that it’s not necessarily going to mean a higher tax rate or an end … Read more...


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