r/NoStupidQuestions • u/Discontitulated • 1d ago

Governments say they can't tax the super wealthy more because they'll just leave the country but has any first world country tried it in the last 50 years?

It would be interesting to see how raising taxes on the super wealthy actually affected a first world country's tax revenue and economy.

Are our first world economies really so fragile the rely on the super wealthy and their meager tax revenue?

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641

u/GrynaiTaip 1d ago

Lithuania decided to tax bank profits during covid, to fix budget deficit. Then the tax was extended. Now the second largest bank (SEB, Swedish company) announced that they're packing up their main office and leaving, specifically because of this profit tax.

Also, they raised prices of all services to cover this new tax, so in the end it's still the customers that pay for everything, while the directors are unaffected and enjoying the greatest profits ever.

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u/NorwegianCollusion 1d ago

Ok, but to be fair, "the second largest bank (SEB, Swedish company)" is not a good starting point for the country. Banks should not be allowed to grow "too large to fail". And especially not foreign banks.

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u/heres-another-user 1d ago

The issue with allowing banks to fail, though, is that your citizens who had all their money in the failing bank will now start to ask questions. It becomes very messy VERY quickly, as governments tend to work much slower getting solutions in place than the people who are now penniless have time for.

But to be honest, usury itself is kind of a fucked up practice and is the source of many problems typically associated with capitalism.

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u/ithappenedone234 1d ago

Nothing about securing the funds in the accounts of the citizenry requires bailing out the top big to fail bank they had their money in. The bank can fail, the directors charged for any crimes committed and the people can just take the cash the government insurance provides and take it somewhere else.

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u/Lopsided-roofer 15h ago

Except that’s not the way it works.

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u/Excited-Relaxed 13h ago

I think the idea is that it would work better that way.

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u/ithappenedone234 13h ago

That’s the way it works for the account holders in the US. But yes, the banks get bailed out anyway, even though they don’t need to be.

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u/cardboardunderwear 3h ago

It's not. A huge bank failing tanks the entire economy. As distasteful as it may be, bailing out banks is correct. That said, in the last big bailout the banks paid the money back.

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u/Sudden-Pie1095 1d ago

Dont bail out the banks. Bail out the people.

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u/yetanotherdave2 1d ago

It's cheaper to bail out the banks.

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u/DrBabbyFart 1d ago

It's even cheaper to just not do anything. Weird how it often costs money to get good results, ain't it?

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u/yetanotherdave2 19h ago

It's not though because the taxpayers are insuring the banks against failure.

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u/Sudden-Pie1095 11h ago

source?

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u/yetanotherdave2 10h ago

The government backs the deposits which would have to be covered by the tax payer. When the banks get a bail out the government owns the shares which they later sell getting the money back the bail out cost (potentially less and potentially more). This is common knowledge.

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u/Sudden-Pie1095 9h ago

They don't really get that money back unless your currency isn't sovereign. If the currency is sovereign then you make a profit you're really doing is contracting the monetary base, which has other associated costs.

If your currency isn't sovereign then from who are you getting the profits of selling the shares? :D

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u/yetanotherdave2 8h ago

The market.

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u/False_Health_6004 10h ago

Brtter yet, nationalize the banks.

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u/KooEnjoyer 1d ago

FDIC ensures that anyone who’s money I care about(normal people) will be safe

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u/LysergioXandex 1d ago

FDIC is meaningless. Sure, the normal people will get their money back if the banks fail. But that money will be immediately devalued by massive inflation.

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u/Independent-Wheel886 1d ago

Banks failing cause deflation

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u/LysergioXandex 1d ago

How so?

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u/Independent-Wheel886 23h ago

Because people can’t get their money out so the money that isn’t in the bank is more valuable.

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u/zzazzzz 20h ago

the bank failed because it doesnt have any money anymore. no money is stuck in the bank the bank gambled it all away thats why it failed.

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u/buddybd 19h ago

The people's money have already been distributed elsewhere and is not being eliminated. FDIC creates more money so a case for inflation can be made.

But I doubt it'll be high enough to make FDIC totally worthless.

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u/Nago31 21h ago

Much of inflation is actually done by bank lending requirements. We allow them to lend out far more than they have in assets to the tune of 10x or simmering. If that bank fails, everything recoils back and the money is no longer out there.

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u/ea6b607 19h ago

The FDIC insures deposits at a ratio of almost 100:1 of the funds balance.

A squeeze of capital made available via bank lending is deflationary.  The trillions of new capital that would be needed to make FDIC solvent would be inflationary.   I don't have a clue what the combined impact would look like,  but would definitely be nuanced by how the federal government acts.

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u/Melodic-Matter4685 18h ago

It always makes my head hurt too... but they correct. That said, u are talking about an "everything fails" instead of say, savings and loan fails, but everything else is fine"

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u/Independent-Wheel886 23h ago

Also, deflation is much worse than inflation.

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u/zzazzzz 20h ago

only if the deflation gets to a certain point until that point its very profitable. and a single bank failing will never have anywhere close to enough impact to be deflating any currency.

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u/bandti45 1d ago

That's not how that works.

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u/LysergioXandex 14h ago

Then tell me how it works.

The bank took my money, then they lost it somehow. Now I can’t get my money back from them, because someone else has it. So the government is going to give me new money to replace it. They probably will be printing lots of new money to provide this.

This increases the amount of money circulating in the system, causing inflation.

That’s my theory, what’s yours?

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u/bandti45 10h ago

So banks mostly profit from loaning out money and getting interest. you put your money in the bank they let other people use a portion of it and pocket the difference. So when they fail other people are using the money you let them hold, so in the past you'd lose all your money since the owners would take whatever they have left before closing.

These days when a location is failing, the government will usually step in before its too late and take over the accounts both loans and investments. If that doesn't happen they draw on the fund they gathered from insurance premiums to repay what the bank can not.

I'm not sure what the solution would be in the event of a wide spread collapse of banks I don't know what the plan would be.

Point is the program is not a source of inflation and is important for protecting the average person.

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u/Global-Knowledge-254 10h ago

FDIC helps prevent deflation caused from a bank failing.

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u/LysergioXandex 7h ago

So you’re saying the inflation is a feature, not a bug?

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u/martin33t 23h ago

Soon to be gone thanks to some people that didn’t like the price of eggs.

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u/Minimus-Maximus-69 22h ago

Not in Lithuania lol

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u/Silver_Hunter8926 20h ago

I think if BOA failed it would wipe out the FDIC very quickly..which makes having smaller banks make more sense...

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u/flonky_guy 1d ago

I would think the fall of 2008 put rumors to rest about government being slow to respond to financial crisis's. The US literally intervened within hours to create a $50 billion insurance fund while the banks were reeling and didn't come up with a response for months other than to say "thank you for the the free loan may have another."

For certain there are government agencies that are routinely sabotaged in order to create crisis moments, like FEMA during hurricane Katrina, But specifically speaking to financial issues, the government is arguably the most dynamic actor in play.

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u/zzazzzz 20h ago

not really. in most places the govt puts an insurance on your account up to some number for me its 250k. in case the bank fails and closes its door tomorrow the central national bank will 1:1 give me what i had in my account up to 250k. because bailing out your citizen is a lot more value than bailing out a bank that was so bad at its job that it failed.

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u/NorwegianCollusion 1d ago

Well, over here we have rules for that as well. The bank guarantee fund guarantees for any deposit up to 2.5M NOK (last time I checked). Most people really don't keep more than that in an account, but would rather invest in something.

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u/Thassar 1d ago

There's ways around that. The money could be insured by the government so when a bank fails the money is safe and the government takes it out of whatever remains of the bank. Or, the government could just step in and take control of the bank. It gets nationalised, the executives behind it get nothing and the money is safe.

And while you're right about the government being generally slow, it's not always the case and I'd take a slower government bank over a rogue private one who thinks they can play it fast and loose because the government will just bail them out when they fail.

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u/heres-another-user 1d ago

That doesn't necessarily protect against the rest of the disaster, though: people losing faith in the banking systems in general and withdrawing all of their life savings at once. While the US does have the FDIC to help protect against this (as it is a series of events that has happened before), it's still easily a potential catastrophe. Bank failures are often catalysts for other critical failures, even beyond a simple loss of faith, and it's just not a situation anyone wants to be in. I'd almost guarantee just about every bank failure in any otherwise stable country has had some committee sit down and seriously discuss bailing them out just so they didn't have to risk any of that.

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u/Thassar 1d ago

True but if a bank gets to the point that they need bailing out the damage is already done. Nobody saw the banking crisis of 2008 and thought "boy, I'm glad the government was there to bail out the banks and keep the industry safe" they thought "what the fuck, why do the banks need bailing out, is this going to happen again in the future". The thing that keeps the public's faith in the banking industry isn't that the same banking monoliths will continue to exist no matter what they do, it's that their money is safe no matter what the aforementioned monoliths do. That doesn't mean the bank needs to get billions in handouts.

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u/Punty-chan 1d ago

Iceland let their banks fail. They are now one of the most rock solid economies on the planet while the rest of the world is floating on a gigantic rolling ponzi that's about to blow at any moment.

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u/ManyNeedleworker3693 1d ago

This. Iceland bailed out the people, let the banks fail, and it meant that the banks that didn't over extend, and managed their deposits properly, got to pick up extra customers and extra deposits.

Good bankers got rewarded, bad bankers got nothing.

The way the US did it, the bad bankers got rewarded and given the chance to do it again.

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u/fqfce 1d ago

They’re also tiny compared to US or the EU as a whole economically. Seems like there might be a moving target when it comes to balancing macroeconomics and ethics, and maybe even include “vibe” or meme culture. I don’t know enough to be certain about the next right move, but it feels like the US could’ve better(or maybe worse) handling the 2008 crash.

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u/JayDee80-6 1d ago

I completely disagree with you. First, in the United States most banks are insured by the Federal Reserve up to 250k. Second, government run banks sounds like an absolutely horrible idea. Everything the government touches loses significant amounts of money.

You used to need a private loan to go to college if you were going to borrow. Eventually, the government got into the school loan business. No problem, right? Until they decided the loans they themselves gave were unethical and should be foregiven with taxpayer money. Those public run banks would loan money out to friends, donors, etc and be a huge source of corruption. They would also move to forgive all kinds of loans and pay those loans back with either tax revenues or debt. It's an absolutely terrible idea.

Edit: I also forgot to even bring up thr government funded mortgages where because of political pressure Fannie Mae and Freddie Mac gave out terrible sub prime mortgages that crashed the world economy.

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u/starm4nn 1d ago

The US government actually did have banking until 1967 in Postal offices.

Guaranteed 2% interest. My current bank doesn't even give 1% interest.

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u/JayDee80-6 21h ago

Wow, the post office would give you 2 percent interest when private banks were giving 5 percent and up? How generous! Look up the interest rate in the 50s and 60s, and you'll realize how absolutely dog shit 2 percent is and also look up why the USPS doesn't offer those services anymore. The USPS can't turn a dime into a dollar, they actually turn a dime into a nickel. They lose billions a year.

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u/Smutty_Writer_Person 20h ago

They don't lose money, they cost money. Nobody says the military, schools, etc lose money. They are a public service. Not a for profit.

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u/JayDee80-6 19h ago

Military, schools, etc don't charge money. Public service is different than a business owned by the public. Why does USPS charge money than?

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u/Smutty_Writer_Person 18h ago

Schools charge money. Property taxes, paid for lunches, parents paying for things done at school, etc. the USPS doesn't, afaik, have its own individual tax to fund it. And it would be fine if it funded pensions like normal companies. Congress changed the rules to where they have to fund it too far ahead of time.

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u/Severe-Cookie693 18h ago

What the last guy said, but they are also practically forbidden from succeeding. They are charged with doing public services and, if I remember right, forced to subsidize spam mail? Lots of outrageous stuff. As an organization, USPS provides great service with meager funds.

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u/JayDee80-6 18h ago

Meager funds, lol. Look up USPS operating budget, and then remember they go billions, with a B, into debt per year. All while UPS and FedEx make billions in profit per year.

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u/Severe-Cookie693 16h ago

You chose the most egregious abusers of labor as your comparison. I suggest as an alternative that they should not be so profitable. One of them is a retailer as well.

They are at a loss of 6.5B a year, nationally. That’s nothing. They aren’t even allowed to close unprofitable locations because they are a government service. Complaining they aren’t profitable is nonsensical.

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u/Get_a_GOB 1d ago edited 1d ago

You’ve got a funny idea about what a government is for. It’s not there to make money, it’s there to spend money on various public goods. Of course it “loses” significant amounts of money, it’s not supposed to be a profit making venture.

You also have a fundamental misunderstanding of what Fannie Mae and Freddie Mac are, and what role they played in the subprime mortgage crisis. Those companies do not “give out mortgages”, it’s just not what they do. They didn’t issue subprime mortgages, or even back a substantial number of subprime mortgages. The underregulated mortgage-backed securities business (I.e. actual private lenders) are the ones that did that, and Fannie and Freddie got caught up in the ensuing market crash - like all real estate-related firms did, regardless of how responsible they were beforehand.

They weren’t perfect, but they were absolutely not the cause of the crash, and people who don’t even understand what their function is (like you!) love to repeat meaningless false talking points.

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u/Gamestop_Dorito 1d ago

Someone else deleted their response to you where they claimed Fannie and Freddie had issued a bunch of failed subprime loans as well. I’m glad they deleted it since it was untrue. Here is the comment with which I was going to respond:

That is not what happened. They decided to purchase CDOs consisting of subprime mortgages as investments, just like other institutions like retirement funds did, and only fairly late into the bubble because they had a fiduciary duty to make more money and these CDOs were giving high returns. They did not issue these mortgages. The mortgages they had been issuing were not subprime and failed at well below the rates that the actual, completely private-industry driven mortgages did.

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u/Get_a_GOB 23h ago

Thanks! There is an understandable level of confusion about Fannie and Freddie. It’s complex, with a long history, arcane vocabulary, and areas for legitimate debate. But there’s also a massive campaign of oversimplified half truths and lies about them that’s been perpetrated by conservatives (as on many, many issues).

It’s their standard playbook: come up with talking points that are 1) as easy to understand and remember as possible, and 2) make the government look as bad as possible, preferably with a snarky, owning-the-libs kind of feel. If they’re only partially true, that’s fine. If they’re false, that’s fine too if the issue is confusing or complex enough that 80% of the population either doesn’t have the background or the time to understand.

They’ve just repeated that so frequently and for so long that it’s become easier and easier for them to succeed at.

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u/Thassar 1d ago

I mean, the fact that I went to university using a government loan and didn't ever touch a private one shows that the issue isn't with government loans, it's with your country specifically. And no, government programs don't "lose money", it's called public spending. They're not supposed to be generating profit in the first place, they're there for the benefit of the public.

Plus, we're talking about a failed bank here. Either the bank fails and you lose your money, the government steps in to prevent you from losing your money or they just give it a handout from the taxpayer which is something that actually loses the government money and provides no benefit to the public.

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u/JayDee80-6 21h ago

There are some government programs, like the FBI, that are public services. True. Then there's things like government loans and the USPS, that aren't supposed to make money, but they aren't supposed to lose money either. Guess what? They lose money. There's a reason socialism and communism has been a huge failure across the globe, and this is why. It isn't specific to America. State controlled entities have underperformed its private sector counterparts all over the world.

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u/Thassar 21h ago

Yeah, you clearly have no clue what you're talking about.

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u/ManyNeedleworker3693 1d ago

You also have no idea what "student loan forgiveness" means. The people whose loans are being forgiven have paid them back already. The remaining balances are unfairly charged interest.

Do some research, learn a thing or two...

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u/JayDee80-6 21h ago

You have absolutely no idea what you're talking about. It's super strange you so confidently are completely wrong. The Biden administration signed an executive order that tried to discharge 10k dollars or 20k dollars worth of debt depending on if you received a pell grant (I think the amount was tied to pell, not 100 percent on that). This was applicable to literally every single loan for incomes under 120k per borrower I believe it was. Actually, I'll do the research for you since you have absolutely no idea what you're talking about. Seriously, you're obviously listening to talking points from unreliable sources. Do some more reading.

"The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples)"

https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/

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u/Smutty_Writer_Person 19h ago

How is it unfairly charged? You invested in yourself. I paid interest for every dollar I borrowed for the tools in my garage

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u/Representative-Cost6 1d ago

Banks should 100% be allowed to fail if your country has a version of FDIC. FDIC was created so that banks can fail and mom and pop will be insured by the GOVERMENT. Bailing out banks is doing the exact opposite. Its bullshit.

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u/JustDiveInTimberLake 19h ago

This is why we use crypto instead of banks

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u/GrynaiTaip 1d ago

Bank profits went up A LOT over the past five years, that's why they were taxed. What would be a better starting point?

And especially not foreign banks.

It doesn't really matter where a company is headquartered. It's very easy to pack up and leave to another country in EU.

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u/NorwegianCollusion 1d ago

Not really relevant to "big Swedish bank pulls out of Lithuania". Imma make my own bank! With blackjack. And hookers!

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u/GrynaiTaip 1d ago

There are two major banks in Lithuania, both are Swedish (SEB and Swedbank), so this is kind of big news because probably 80% of people use one of them.

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u/QueasyFailure 1d ago

Don't forget the blow!

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u/Severe-Cookie693 18h ago

Don’t be silly, robots don’t have noses.

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u/AdagioHonest7330 1d ago

What has driven bank profits? Investment operations?

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u/GrynaiTaip 1d ago

Prices (inflation) went way up across the EU during the start of covid, so the European Central Bank raised the EURIBOR rates for everyone, to slow down the spending and control the inflation. It's basically an extra fee on your house loan.

Most real estate loans in Lithuania have flexible rates, so all of a sudden people had to pay a lot more, and all of that money went straight to the banks. 800 eur/month loans became 1000/month. Banks got a lot of extra money.

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u/AdagioHonest7330 1d ago

If the central bank increased the rates, then the banks had to pay more to borrow money to then lend out.

The markets have had an amazing run the last few years and most banks also have investment interests and or brokerages.

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u/xX8Havok8Xx 22h ago

Remove the ability to trade in the country if they leave and forfeit all ownership of assets within the country to a holding trust that any profits/revenue are used for public good. Companies that return may apply to have their property returned, which will be granted, as long as they cover the calculated tax owed from their years away.

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u/GrayArchon 21h ago

What the fuck? This would instantly kill any foreign investment, if they felt they couldn't leave the country once they started doing business there. Under what principle are you saying companies can't decide where they do business?

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u/LegoFamilyTX 11h ago

Tell me you're 14 years old without telling me...

That's one of the dumbest ideas in awhile, and Reddit is full of them.

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u/TheDaemonette 21h ago

I think the problem is the amount of stuff they are allowed to defer/offset tax for. If they weren't allowed to do stuff like 'pay a fee for the use of the bank name' to a head office in a low tax country, for instance, then they wouldn't be able to reduce their actual tax paid to a miniscule percentage of their profits. It seems like there should be a minimum rate of tax that should be paid, below which the corporate is not allowed to reduce by accounting tricks. That rate should be set at some fraction of the highest marginal personal tax rate in that country. Either that or the UN should get together and do something useful for a change and agree a global minimum corporation tax to avoid tax havens from taking the piss.

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u/ForesterLC 1d ago

No company should be allowed to grow too large to fail. That's the real root of many of our problems. Capitalism doesn't work when you're allowed to buy your competition and regulators. Fixing this would fix most of our other issues.

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u/Acceptable-Let-1921 1d ago

That's when you just switch to a bank that isn't traitors. That's what many of my friends did, SEB always sucked anyway.

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u/brazucadomundo 1d ago

How would it be possible to prevent a bank from being "too large to fail"? Having a maximum allowed deposits amount in a single institution?

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u/marinuss 23h ago

Not even a big company. $7 billion USD in revenue is not even in the top 100 US companies which start at $40+ billion in revenue at the bottom.

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u/VaughnSC 19h ago

What the US did in 2008 created a ‘moral hazard’, they should have chosen one bank at random and let them fail spectacularly, so that risk would give every C-suite cold sweats and nightmares.

They can’t all be too big to fail. There should be regs forcing splits when certain caps surpass a related pain threshold for the economy.

Not an economist, but can see trading short term pain for long term gain where feasible. Unfortunately, politicians can’t see past the next election.

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u/lmmsoon 17h ago

I believe this post is called deflection . There is a certain amount of money that people are willing to pay . Why don’t we hold the politicians accountable. You want to hold wealth people accountable but after politicians are in office they become wealthy and we don’t say a word

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u/Lopsided-roofer 15h ago

Allowed to grow too large?

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u/Unilythe 11h ago

There will always be a "second largest" bank though, that doesn't mean it is too large to fail. 

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u/TheWhogg 10h ago

How big do you think 🇱🇹 is? How many world class banks with extremely strong governance and risk controls can they support?

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u/NorwegianCollusion 8h ago

About half as big as Norway. We have 122 local banks (not branches, companies) and 12 foreign ones. Biggest foreign bank is 7th biggest bank overall. I admit I used that foreign bank (santander) for a car loan in recent times, but I paid out the remaining 60% of that last week.

Yes, we have more money per capita. But still, depending on foreign companies to do your banking is not a good idea.

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u/tigersgeaux 1d ago

Businesses always pass it along to the consumer

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u/0111010101 1d ago

Why not just let them go? Let the door hit them in the ass on their way out. It will create more opportunities for businesspeople who actually care about their society.

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u/GrynaiTaip 1d ago

Nobody's stopping them, they are free to leave. No other bank has expressed similar ideas.

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u/WiffleBallZZZ 1d ago

This all sounds like an extremely one-sided description which is light on details.

Are you saying that there were NO TAXES on bank profits prior to this new tax? That seems highly unusual. If that's the case, then why would they care if SEB was based in their country or some other country?

Also: how much did they raise their prices on "all services"? Was it higher than the inflation rate and the price increases imposed by other banks?

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u/GrynaiTaip 1d ago

Are you saying that there were NO TAXES on bank profits prior to this new tax?

They were paying the same profit tax as everyone else, 15%. It's fixed in Lithuania, same for everyone.

Banks had record profits during this time, so the government decided to add a couple percent tax (I'm not certain how exactly it's calculated) on profits which exceed the 2019-2022 level. This particular bank had 170M profit in 2022, 300M profit in 2023, they had to pay 34M for this new Bank Tax.

Most of this tax goes to the military, because we have a drunk and aggressive neighbour next door.

Now SEB decided to leave the country as a fuck you, I'm not sure how they'll get around the tax because Lithuanian profits will still be from Lithuania, but I guess it really is just a "fuck you", making 1500 people jobless.

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u/WiffleBallZZZ 1d ago

They are keeping the branch in Lithuania - no one will be jobless, & nothing is really changing.

Source: https://sebgroup.com/press/news/2024/seb-to-simplify-its-legal-structure-in-the-baltics

That's the sort of thing I expected. This sort of anti-tax hysteria is always overblown.

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u/GrynaiTaip 1d ago

They are keeping the branch in Lithuania

They are keeping their operations in Lithuania, not the office. It means that they are not shutting down, just the office will be relocated to Tallinn, only essential support will be left in Vilnius.

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u/WiffleBallZZZ 1d ago

It means the office in Tallinn will now be designated as their main Baltic office - but that is just a title. It's like when a company is based in Bermuda, but none of their employees are really located there.

To continue their operations in Lithuania, they will need to keep the majority of the employees who are currently working there. The consolidation will probably just include layoffs at the upper management levels - it should be nowhere near 1500 people who will be jobless. And it could be near zero, if they just move the upper managers to Estonia.

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u/GrynaiTaip 1d ago

It's like when a company is based in Bermuda, but none of their employees are really located there.

The story is still developing so we don't know for sure, but it looks like most of the company is leaving Lithuania. All management, programmers and support are moving to Estonia, only call staff will remain here.

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u/WiffleBallZZZ 1d ago

Source?

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u/GrynaiTaip 1d ago

https://www.lrt.lt/en/news-in-english/19/2442620/seb-to-move-baltic-headquarters-to-tallinn-in-a-blow-to-lithuania

Šimkus (Central Lithuanian Bank governor) said that if SEB merges the three Baltic banks into one (in Tallinn), then the deposit insurance contributions (this new tax) SEB currently pays into a separate fund in Lithuania will be transferred to Estonia.

If the bank actually does move, then we'll lose tens of millions a year, which is a significant amount for a small country like Lithuania.

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u/Odd_System_89 1d ago

You also forgot that when they moved they laid off a large number of employees as well who also lost out. Also, most large company's like that pay their staff better then smaller company's who stay behind so a increase to the worker pool and a decrease in what wages those jobs offer, which of course will result in even lower wages cause of the increased in workers.

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u/FormerChocoAddict 1d ago

Businesses don't pay taxes

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u/GrynaiTaip 1d ago

They do, but not all that much.

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u/FormerChocoAddict 1d ago

The point is they don't pay taxes, their customers do. So any tax on a business is effectively a tax on their customers.

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u/GrynaiTaip 1d ago

The point is they don't pay taxes, their customers do.

That's the case with literally all companies, small and large.

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u/FormerChocoAddict 1d ago

Exactly. It's just a reminder in this discussion where people (I think) tend to forget that taxing businesses ends up taxing customers. And since most businesses, if you follow the supply chain down far enough, end up serving consumers, most business taxes end up being a tax on consumers. 

I'm not advocating a policy position, just trying to remind people that taxing businesses is not just free money for the government.

Op was originally about taxing the wealthy, not specifically businesses, but that's where this thread went.

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u/GrynaiTaip 1d ago

taxing businesses ends up taxing customers.

Yep, that's exactly right.

The idea was to tax the crazy profits that the banks were making, but the banks just increased the fees to recoup the loss.

It's really difficult to limit how much a massive corporation makes, no easy way around it.

1

u/OmahaWinter 1d ago

That’s what they SAID. But who knows why they really left—they like to blame taxes. It’s easy.

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u/GrynaiTaip 1d ago

I can't think of any other reason. Can you?

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u/Shakewhenbadtoo 1d ago

So now smaller banks can take market share by simply not charging those fees? Win win.

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u/RelaxPrime 1d ago

Also, they raised prices of all services to cover this new tax, so in the end it's still the customers that pay for everything, while the directors are unaffected and enjoying the greatest profits ever

Corporate greed. Not taxes.

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u/AffectionateTea841 1d ago

If profits are taxed, how does raising prices cover the tax? Raising prices just causes even more profits which results in more taxes.

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u/TheRealGOOEY 18h ago

Say I have a $100 product that is taxed at 20%. I get $80 after the sale. I am happy with $80. Then, the tax goes up to 40%. I don’t want $60 after the sale, I still want $80, so I raise the price of the product to $134. Now I still get $80.

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u/AffectionateTea841 14h ago

I get that but that mindset is just pure greed. We are talking profits not income. Employee pay is a deductible expense (at least in the US). Having the company hoard money is only beneficial to the stock holders. Putting the money back into the business/lowering prices lowers the business’ taxes and benefits everyone.

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u/jhnmiller84 1d ago

Yeah. That’s what happens when you tax corporations. They pass it on.

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u/MansNotHat 1d ago

Then seize the bank and nationalize it if they try

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u/rockaether 1d ago

In economic theory, whoever has higher price elasticity would end up paying more of the additional tax. So it's difficult to say who exactly pay for what

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u/ldn-ldn 22h ago

Customers always pay all the taxes. You can't tax companies, only people.

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u/traveller-1-1 20h ago

Tax the directors, share holders. They can leave the $ stays. Ban banks that leave from doing business in that country.

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u/DakezO 19h ago

This is why I’m switching to a credit union

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u/Onyournrvs 18h ago

they raised prices of all services to cover this new tax

This, right here, is what everyone always fails to grasp when talking about "taxing the rich." In the end, it's everyone else who ends up paying.

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u/Intelligent-Coconut8 12h ago

Don't tell the leftsit that raising taxes also raises prices or you'll get.,...DOWNVOTED

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u/GrynaiTaip 12h ago

I am left-leaning but also I'm in Europe, it's not a curse word here.

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u/Intelligent-Coconut8 11h ago

Leftist here try think raising corporate taxes will result in lower prices/no price changes and cause companies to invest more...it's some whack mental gymnastics they do..

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u/GrynaiTaip 11h ago

Right*rd thinks that he knows everything about everyone.

Nobody here hoped that this tax will lower prices, but you don't know shit, so of course you make things up. Go suck an orange, loser.

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u/NoMansSkyWasAlright 7h ago

It's worth noting though, that these are little countries. The entirety of Norway has a smaller population than NYC. So big companies may just decide not to do business with them rather than take slightly less in profits just as a way to send a message. Larger economies, though, these companies would likely hem and haw about how they'd leave if the laws change and then not go through with it if they did - and likely spend time trying to campaign to get the laws changed back or get some sort of special exemption.

A good comparison of this would be Uber and Lyft operations in California during the AB5 debates. Uber and Lyft campaigned heavily against it and threatened to leave California if it passed. But then it did pass and all they did was start campaigning heavily for prop 22, which essentially gave them a special exemption. Compare this to Minneapolis, which also looked to pass legislation that would've favored workers and negatively impacted the bottom-line: and it looked like the rideshare giants actually were going to pull out of there altogether. But then they changed their minds at the last minute.