Unsurprisingly, highly regulated sectors like banking where entering is extremely hard display cartel like behaviors. There is no incentive coming from the competition so why would anyone lower the net interest margin. In this context, I think a windfall tax somehow makes sense. Then again, I'm pretty sure it's going to be misused by the government. I would much rather see regulation forcing banks to raise interest rate on deposits but well at least this goes somewhat in the right direction.
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 services. If one wants free enterprise and reap its benefits one has to allow high profits for companies and see if competition takes care of the "problem".
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.<p>Wouldn't redistributing these profits back to mortgage holders just undermine the raising of interest rates in the first place?
Windfall taxes and bailouts aren't the policies that create a healthy banking sector. Instead they should worry about crafting better regulations and having competition for where people's savings go.
> If one wants free enterprise and reap its benefits one has to allow high profits for companies and see if competition takes care of the "problem".<p>Max profits for BigCo (Bank, the rest, same) and lower the wages for the people seem to be the M.O. these days.<p>I'd love to see higher Corp tax that is spread to people. Force higher tax and give tax break to force them spread their profit to their employers would be one example that is beneficial for everyone.
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.
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?
Do we levy windfall taxes on farmers after a bumper crop harvest?<p>No, because we assume the profits will be reinvested.<p>How does a bank efficiently re-invest? Does taking profits mean efficient reinvestment? I dont think so. It just means inflation.<p>Windfall taxes just grow the big government. More cost to be directly passed on to consumers at the end of the day.<p>If we don't like capitalism, why not just say we want to ban usury and be done with it?<p>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.