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Italy approves 40% windfall tax on banks for 2023 as profits soar

theguardian.com

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Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#91

Post by bushbaba »

bko wrote: post #75
madballster wrote: post #21

This is an old European disease. Corporate profits are often seen as an adverse result; of consumers being taken advantage of unfairly. Taxing excess profits beyond what are already high tax rates is popular amongst voters (e.g. see poll results in the UK, 2022). However, this lowers the appeal for new entrants to enter these markets to compete for these excess profits through better and more efficient products and s…

I think that's correct. I have a theory about bullshit jobs in highly regulated or profitable industries. Places like Google have a ton of employees that don't contribute anything but make work projects. Why don't they just cut the workforce in half? Because their profit margin would be too high. It's already 25% with all the bloat. Imagine if their profit margin shot up to 50%? They would likely be dragged in front…

Bullshit jobs are encouraged for management to grow their org into a promotion. These companies are growing so nobody really questions the bloat as making the wrong move might impact future growth (or cause your action to be blamed for growth miss).

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#92

Post by staticman2 »

gruez wrote: post #69
rightbyte wrote: post #49

Earlier quoted context omitted.

Maybe the tax could be progressive to help smaller players? I dunno why only wage tax is progressively taxed.

>I dunno why only wage tax is progressively taxed. Companies are just groups of people. Why should a group of 100 people get taxed more than a group of 100,000 people? Progressive rates on wages make sense because it's applied to each person individually.

"Companies are just groups of people."

The legal definition is certainly not "groups of people." Describing them in this folksy way is outright misleading.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#93

Post by kevinventullo »

gruez wrote: post #69
rightbyte wrote: post #49

Earlier quoted context omitted.

Maybe the tax could be progressive to help smaller players? I dunno why only wage tax is progressively taxed.

>I dunno why only wage tax is progressively taxed. Companies are just groups of people. Why should a group of 100 people get taxed more than a group of 100,000 people? Progressive rates on wages make sense because it's applied to each person individually.

Why should a group of 100 people get taxed more than a group of 100,000 people?

It would be the other way around. This is in order to encourage the formation of new groups, which almost always start out small.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#94

Post by bko »

gowld wrote: post #83
bko wrote: post #67

Earlier quoted context omitted.

I don't know. I kind of like competition in banking. I like free checking, ATM fee reimbursement, better customer service, better websites and apps, better alerting etc. You get that through competition for my deposits.

That causes lower profits, so won't be affected by windfall tax.

Maybe they won't but new competitors will see the outsized profits and try to get my business by offering these things. I have all these things at my bank (TD) so the system seems to work.

This is pretty uncontroversial basic economics...

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#95

Post by Aunche »

toyg wrote: post #22
koolba wrote: post #16

Earlier quoted context omitted.

If there are no windfall profits during boom times, are you equally onboard with subsidies during lean times? If the banks are doing something predatory then that behavior should be stopped. Not being able to define it and then seizing an arbitrary portion of the profits isn’t going to stop it in the future. Hell, since profit is after expense, they can increase CEO salaries to reduce it and be taxed less! Plus if th…

In the UK (but Italy as well), banks are routinely bailed out. Government takes over, absorbs liabilities, sells back to the market an unburdened company ready to make new profits (and new debts). Utilities are similarly bailed out, because what are you going to do, leave people without water and electricity? If we have risk floors, we should also have profit ceilings.

In the US utilities are subject to profit ceilings, and I'd be surprised if that wasn't the case in Europe. That's one of the reasons to classify something as a utility. By "energy companies", I'm assuming the top comment means fossil fuel companies.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#96

Post by acyou »

Do we levy windfall taxes on farmers after a bumper crop harvest?

No, because we assume the profits will be reinvested.

How does a bank efficiently re-invest? Does taking profits mean efficient reinvestment? I dont think so. It just means inflation.

Windfall taxes just grow the big government. More cost to be directly passed on to consumers at the end of the day.

If we don't like capitalism, why not just say we want to ban usury and be done with it?

For me, this line of thinking usually ends with: If you can't beat them, join them. As Adam Smith Founding Fathers, and people at the top everywhere would have hoped. Time to get off Hacker News and make my profits soar.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#97

Post by jntvjnvutnuvt »

Hamcha wrote: post #71
jntvjnvutnuvt wrote: post #60

Earlier quoted context omitted.

Which industries with big capital requirements don't have competitors?

In the US: ISP & Healthcare

Most Americans have access to AT&T, Verizon and T Mobile. They also have a choice of insurance plans and healthcare providers.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#98

Post by t0mas88 »

tensor wrote: post #32

This is a bit strange as presumably interest rates were raised in the first place to prevent inflation. Turning around and scolding the banks for doing what the government wanted in the first place seems counter productive. Wouldn't redistributing these profits back to mortgage holders just undermine the raising of interest rates in the first place?

There is debate about whether high interest rates work to solve inflation at all. But if you believe they do, it makes sense to want the banks to also pass those rates on to savings accounts instead of only milking the mortgage market. Because that would theoretically cause consumers to save more instead of spending the money.

But these high bank profits could indicate that the high rates have not been passed on to saving accounts.

One issue in Europe is that there is no easy way for consumers to access the high interest rates with their available cash. While the US government has an online portal for consumers to buy state debt directly.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#99

Post by jamil7 »

ricardobayes wrote: post #9

Can we have energy companies next? Pocketing record profits during this situation is just disgusting.

I'd rather governments just retook control of a lot of utilities and nationalised them, rather than random one-off windfall taxes.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#100

Post by userabchn »

brmgb wrote: post #29
nequo wrote: post #5

Earlier quoted context omitted.

> I would much rather see regulation forcing banks to raise interest rate on deposits Regulation that increases competition would be even better. It seems like that would be the underlying problem.

I am not sure myself. The past two decades have shown that banking is a sector which needs to be tightly regulated and bankers can never be trusted to not do utterly stupid things if there is even the slighest hint of profits. Honestly, I would be fine with the banking sector being nationalised at this point at least for the retail part. We are already bailing out banks when they fail so let's be coherent. It's entir…

I think the more coherent thing to do would be to treat banks like other industries and not bail them out. Customers would then place their money in safer banks, discouraging banks from engaging in risky behaviour.
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