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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

#171

Post by scotty79 »

imtringued wrote: post #160
scotty79 wrote: post #117

Earlier quoted context omitted.

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.

You are absolutely correct but you are forgetting one thing. The entire system ratchets itself back to a zero money supply automatically as debts are repaid. This means the money supply shrinks overall if the interest rate is sufficiently high and the rate of repayment exceeds the rate of new loans being taken on. This is a very slow acting way of doing things and it can lead to debt deflation. If there was a way to…

What's wrong with debt deflation?

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

#172

Post by neilwilson »

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'd go further than that. Corporate profits become stores of value. The money stops moving, which reduces the transaction rate and lowers inflation.

That is, after all, how interest rates work. We 'tax' the mortgage payers and give it to deposit holders to hold as a store of value. That reduces the transaction rate.

So if we tax corporate profits and redistribute it around, then interest rates have to go higher to force the money released from the corporate profit store, to the deposit holder store.

If prices are too high, the solution is to encourage the capitalisation of more competition, not encourage keeping money in the bank.

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

#173

Post by neilwilson »

scotty79 wrote: post #117
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.

That's the theory. The practice is somewhat different.

Money is a stock. It's the flow of transactions that matter for inflation, and that just increases - as we see from increased credit card lending, and increased trade credit in business (which is the commercial equivalent).

Higher rates just means higher prices, which then leads into higher wage demands.

There is no control until the money becomes 'dead' - saved by people who already have money.

Which funnily enough the banks were doing before they got taxed...

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

#174

Post by pkaye »

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.

Didn't the no surprises act change that for emergency issues? The insurer has to cover it as in plan.

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

#175

Post by thewildginger »

MikeDelta wrote: post #149
AnimalMuppet wrote: post #139

Earlier quoted context omitted.

In an industry where "too big to fail" is a real thing, taxing bigger companies more seems perfectly reasonable. Not just a little bit - significantly more, even painfully more. Create some actual incentive for banks to not get that big.

Banks have been trying to reduce their balance sheets and their risk-weighted assets, because of all the extra charges and reserves they need to keep. They cannot just get rid of a large of their customers like that and collapsing shareprice. In some businesses there is also a benefit in scale (like in trading), and there you see the US banks leading because they've had it. If you want the US banks to fully take over…

Putting banks out of business? Woah weird conclusion but I like it. This whole windfall tax sounds even better than I thought!

The world of money existed before banks, it will exist after.

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

#177

Post by polishdude20 »

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…

But like, you can use those profits before they get taxed to pay your workers more and invest in more and better equipment and tooling. So you can lower your tax bracket by providing a better service anyways.

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

#178

Post by happymellon »

jntvjnvutnuvt wrote: post #118
MSFT_Edging wrote: post #110

Earlier quoted context omitted.

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.

Many, and not all?

What a wild system you have.

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

#179

Post by scotty79 »

AnimalMuppet wrote: post #80

Meh, this is just going to lead banks to find ways to move profits into 2024. If they're serious, they should permanently raise the tax rate on high-earning banks.

Why is personal income tax progressive but not corporate income tax?

Of course progression needs to be based not only of the profits of a given corporation but also all of the subsidiaries down the chain of ownership.

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

#180

Post by robocat »

cykotic wrote: post #144
gruez wrote: post #137

Earlier quoted context omitted.

>I think you don't understand what the word suffer means. 1. You haven't heard of the saying "suffering a loss" in the context of finance? 2. see definition 3: https://en.wiktionary.org/wiki/suffer#Verb > Those entities don't lose anything. It's not possible to lose something you don't have. In an alternate universe where the windfall tax did not occur those entities have more money. But in this universe they don't l…

I made an edit to my comment above. It may explain more my position. We live in a society and there aren winners/losers in a financial sense. But we all have to live together. That 10 people have as much wealth as 150 million people is obscene and immoral. Taxing such wealth to use for the betterment of us all is right, just, and sound policy. Obviously we disagree on this. I hope your view does not win out in the lo…

> there aren winners/losers in a financial sense

That sounds like zero-sum thinking.

I believe that if you think of the world using zero-sum thinking (that winners are balanced by losers), you will end up with a very skewed view.

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