The supply of financial capital is very mobile. People can move their bank and brokerage accounts around the world and invest in foreign corporations with a click of the mouse. Therefore, taxes on financial capital:
The supply of financial capital is very mobile. People can move their bank and brokerage accounts around the world and invest in foreign corporations with a click of the mouse. Therefore, taxes on financial capital:
are a good idea.
will not raise very much revenue from suppliers of financial capital.
will not be a significant source of deadweight loss.
are profitable for the government.
The correct statement in this context is:
will not raise very much revenue from suppliers of financial capital.
This is because the high mobility of financial capital allows investors to easily relocate their investments to jurisdictions with more favorable tax conditions. As a result, taxes on financial capital may lead to capital flight, reducing the overall tax revenue that governments can collect from these investments.