Talking on 20% taxation of all financial profits: why it is wrong

Deputy Minister for Economy, Alfiero Grandi, said that the government aims to level taxation on financial incomes (now 12,5%) and on banking accounts (now at 27%) to 20%. In fact, it is a while that majority parties are talking about this, but until now they couldn’t find an agreement. In my opinion, leveling taxation in this way is wrong, and is based on wrong assumptions.

The Minister for Social Solidarity said in an interview that “is not accettable that a worker pays 30% taxes on his incomes, while an investor only 12,5%“. First of all, somebody should explain me why the worker and the investor should be two different people. I think this is a “caste-oriented” attitude, with a look at the world in watertight compartments, that should be surpassed in the XXI century. Investment is a way workers have to protect their savings. Or it should be, since to succesfully invest one should be informed, while in Italy ignorace seem to be something to be proud of, maybe because it is useful to a lot of people: if you are ignorant, banks can palm you off anything they want to; political parties can get votes only telling they are the “champions of the good worker against the evil owners” (or the champions of the good owners against the evil workers, it depends). If somebody cared about workers interest, he should try to let workers know better the investment world, not just keep them away.

Anyway, why it may be right that “a worker pays 30% taxes on his incomes, while an investor only 12,5%“? Well, first of all, there is the risk side. As a worker, in the worst case scenario I can lose my job, as an investor I could lose all invested money. So it is reasonable to encourage people to invest money, since investing in the end they give money to companies, that — let’s not forget — give jobs to workers.

Besides, it looks to me that many left-wing member of Parliament confuse financial incomes with annuities. Annuities brings only incomes, while financial investment may bring also (sometime substantial) losses.

Finally, money from investment in equity shares does not comes from nowhere, but it is a result of company activity, that is already subject to taxation. So, at least, one should separate capital gains from dividends. Or maybe one could think of rising taxation on dividends, but also to reduce it on company activity, which may probably allow them to reach a better efficiency. But again, one should think of everything in watertight compartments.

Italian translation of this post: Si torna a parlare di tassazione al 20%: perché è sbagliata

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