Sophisticated individuals warned governments that counter-productive over-regulation would backfire. Socialists refused to listen and decided to please the uninformed masses. The U.S. leads socialistic
economics in the developed world and pushed through Sarbanes-Oxley which was the biggest dagger in recent history.
Sarbanes Oxley forced tens of thousands of financial firms out of the country. They took jobs and tax revenues with them and all New York City could do is watch how the socialistic pest created laws which forced the lifeblood of the economy out of the country. London, thanks to Queen Elizabeth II, welcomed the exodus of firms and their talent and London became and remains the financial capital of the world.
As usual, the socialists did not learn from their mistakes and as a result of the ongoing financial crisis which started in 2008 in the most regulated part of the U.S. financial system where the government had the most oversight, control as well as influence. The masses where furious after the socialist inspired and counter-productive bailouts in which politicians wasted over $1 Trillion in taxpayers money in order to accomplish absolute nothing than public anger and new idiotic regulation.
Dodd-Frank was born and the Volcker Rule implemented. Of course it will have no beneficial impact on the U.S. financial system. The only thing it does and will do is force more financial firms out of the country. U.S. based banks will not be able to compete with its counterparts and the cap in bonuses will see top talent move outside the U.S. and away from U.S. banks in order to no be punished by the socialists for being successful.
More and more talent leaves those banks and more limitations are being be placed on trading activities which results in less revenues those banks will be able to generate and translates into less tax revenues for the socialistic cancer which has the economy infested and grows at an alarming rate. The socialists then have this idea to increase the tax rate which they think will increase tax revenues and of course they are wrong as always.
The math is simple:
5% Tax Rate on $100,000,000 in taxable profits will result in a tax bill of $5,000,000. The company will continue to expand and create more jobs which will lead to more economic activity and higher tax revenues.
Here is what socialists were educated to believe if they would increase the tax rate:
40% Tax Rate on $100,000,000 in taxable profits will result in a tax bill of $40,000,000. They know have much more money to waste on their social programs.
Here is reality:
40% Tax Rate on $0 in taxable profits will result in a tax bill of $0. The company will simply leave the country. Not only did the socialists cut tax revenues by $5,000,000 in this example, but the company would fire their employees and eliminate their tax revenues as well. This will result in a decrease in economic activity and the vicious cycle will continue. A tax increase hurts the entire economy, cuts into tax revenues and ads to the unemployment rate.
U.S. banks currently are caught in the middle of it as they see heavy limitations in their activities thanks to over-regulation, the departure of top talent to companies which appreciate and value their skills as well as the inability to fill those lost positions with quality talent as they all run away from the limitations and caps. Every smart individual hates socialists.
As a direct results of all the unnecessary and counter-productive regulation U.S. banks have lost their competitive edge, will shrink in size and see business being taken away by competitors. It will translate in more lost jobs in the financial service sector, less tax revenues and less economic activity from the very class which potentially had the biggest impact on consumer spending.
Nice job socialist pest!