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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

#111

Post by brmgb »

userabchn wrote: post #100
brmgb wrote: post #29

Earlier quoted context omitted.

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.

Sure, I'm convinced that no one is going to riot when they get their their lifetime savings casually wiped out. I bet on them fully understanding that they just made a terrible decision when they chose the wrong bank, it's entirely their fault and that it is what's best for the economy as a whole.

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

#112

Post by scotty79 »

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.

Because their capacity to exploit the market doesn't grow linearly with the number of eployees.

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

#113

Post by ilyt »

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…

Well unless the companies decide to just not compete on price and keep it high, see the fuel prices in EU.

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

#114

Post by jntvjnvutnuvt »

Silhouette wrote: post #109
jntvjnvutnuvt wrote: post #60

Earlier quoted context omitted.

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

Banking! If there are meaningful competitors then that implies there is meaningful competition. But many financial services firms have been making huge windfall profits by creating a wide interest rate spread even though they would still be (very) profitable with much lower spreads and their customers have a clear incentive to go with a competitor offering a better interest rate. So clearly there is not effective com…

Well, there are thousands of banks in the US alone that offer mortgages and loans.

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

#115

Post by Silhouette »

gwright wrote: post #107
toyg wrote: post #24

Earlier quoted context omitted.

> see if competition takes care of the "problem". We have seen: for industries with big capital requirements or heavy regulatory frameworks (enacted for everyone's safety), it just doesn't .

Irrespective of the the benefits and/or feasibility of competition to bring prices down, the larger problem with this ad-hoc windfall profit tax is that it is ad-hoc. This is changing the rules after the game has started. The article reports the effort as a "surprise tax".

This is changing the rules after the game has started.

The point is that a windfall is also - by definition - a favourable change in the rules after the game has started.

The moral question here should be a simple one. Did the investors in the banks know (or at least reasonably expect) that they would make these profits when they decided to make their investment? If they didn't and they invested anyway then there's a reasonable argument for a windfall tax as long as it only claws back gains they had no reasonable expectation of making and did nothing useful to earn.

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

#116

Post by ilyt »

gwright wrote: post #107
toyg wrote: post #24

Earlier quoted context omitted.

> see if competition takes care of the "problem". We have seen: for industries with big capital requirements or heavy regulatory frameworks (enacted for everyone's safety), it just doesn't .

Irrespective of the the benefits and/or feasibility of competition to bring prices down, the larger problem with this ad-hoc windfall profit tax is that it is ad-hoc. This is changing the rules after the game has started. The article reports the effort as a "surprise tax".

Companies made ad-hoc profits on pretending it's the inflation and raising the prices while having rising profits. I have zero problems with ad-hoc tax on that.

Frankly I think taxing some part of revenue instead of just income on big companies would be beneficial, no more "investing" in making market harder to newcomers (or outright buying them out) and getting tax cut on that.

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

#117

Post by scotty79 »

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?

I'm not sure why people think higher interest rates reduce inflation by removing money from the economy.

Main reason high interest rates reduce inflation is that they disincentivise taking new loans and each new loan take is new money printed. So higher interest rates is just putting breaks on money printing.

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

#118

Post by jntvjnvutnuvt »

MSFT_Edging wrote: post #110
jntvjnvutnuvt wrote: post #97

Earlier quoted context omitted.

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

But will their choice of health insurance provider be accepted at the hospital an ambulance took them to? Who knows but for that person, its time to play bankruptcy roulette.

Many healthcare plans cover emergency out of network hospitals.

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

#119

Post by gwright »

cykotic wrote: post #10
sdfghswe wrote: post #6

I dislike banks as much as anyone else. But does it bother anyone else to see rules changed around? Wouldn't it be a better approach to tell people/corporations how they're gonna be taxed?

It does not bother me. But I think there should be a min/max for how much wealth a person has. No one suffers from taxing windfall profits. Windfall , by definition, being unexpectedly high profits.

If you have surprise ad-hoc taxes (i.e. laws) they you no longer have the rule of law. In this case it is almost an ex-post facto law as the tax applies to earnings that occurred before the tax existed.

Surprise laws should bother you on general principles.

Tax unpredictability, high taxes, or capping profitability is a great way to scare off businesses from operating in your jurisdiction.

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

#120

Post by cmmeur01 »

jntvjnvutnuvt wrote: post #114
Silhouette wrote: post #109

Earlier quoted context omitted.

Banking! If there are meaningful competitors then that implies there is meaningful competition. But many financial services firms have been making huge windfall profits by creating a wide interest rate spread even though they would still be (very) profitable with much lower spreads and their customers have a clear incentive to go with a competitor offering a better interest rate. So clearly there is not effective com…

Well, there are thousands of banks in the US alone that offer mortgages and loans.

And that number has been steadily trending down with mergers and acquisitions.
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