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From Securities Regulation Daily, February 2, 2015

President seeks 15 percent increase in SEC’s budget for FY2016

By Jacquelyn Lumb

The Obama Administration’s 2016 budget, which was released today, calls for $1.7 billion in funding for the SEC and $322 million for the CFTC, representing increases over the 2015 enacted levels of 15 percent and 29 percent, respectively. The budget also offers support for legislation to enable the funding of the CFTC through user fees like all of the other financial regulators. The Administration said it continues to support Wall Street reform efforts and will oppose efforts to restrict the funding independence of other financial regulators or attempts to roll back Wall Street reform.

SEC funding. The SEC’s funding does not have an impact on the federal deficit since it is matched by fees collected from the industry. The SEC historically has collected far more than it receives in appropriations from Congress, with the balance going to the Treasury.

The budget increase would permit the SEC to hire 225 additional examination personnel, 83 additional enforcement personnel, and 37 additional staffers to bolster market oversight. The increase will also permit additional investments in technology. As the SEC hires and trains investment adviser examination personnel, it hopes to reach a long-term goal of inspecting 14 percent of investment advisers each year.

Chair Mary Jo White issued a statement in which she noted that the SEC’s responsibilities have increased significantly over the last few years while at the same time, the financial markets and market participants have grown in size and complexity.  She said that providing the SEC with the resources it needs to effectively oversee these markets and participants benefits America’s investors, businesses, and economy.

White said, “I am pleased that the President’s budget request would allow us to hire additional staff to enhance our enforcement and examination capabilities, provide greater oversight of our markets, add more experts to implement our expanded rulemaking responsibilities and permit the agency to continue to leverage technology to help fulfill its important mission.”

New taxes on financial institutions. The Administration’s budget also would impose a new, seven basis point fee on large, highly leveraged financial institutions with over $50 billion in assets, with a goal of preventing another financial crisis.

International reform plan. The President proposes a 19 percent minimum tax on foreign earnings that would require U.S. companies to pay tax on all of their foreign earnings when earned, with no opportunities for deferral, after which the earnings could be reinvested in the U.S. without additional tax.

The President’s international reform plan also would prevent U.S. companies from avoiding tax through inversions where they buy smaller foreign companies and then reorganize the combined firm to reduce U.S. tax liability. The budget’s proposed international reform plan would prevent foreign companies operating in the U.S. from using excessive interest rate deductions to strip earnings out of the U.S. and avoid U.S. tax. President Obama said he believes the only way to fully address the inversion issue is through action by Congress, and preferably as part of a broader tax reform initiative.

The budget would impose a one-time transition toll charge of 14 percent on the up to $2 trillion of untaxed foreign earnings that U.S. companies have accumulated overseas and use this one-time revenue to finance the President’s six-year surface transportation reauthorization proposal.

MainStory: TopStory SECNewsSpeeches

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