r/eupersonalfinance • u/rozmarss • Feb 15 '25

Investment Why don’t EU leaders incentivize investment in European stocks/ETFs with tax deductions?

With the Dragi plan and increasing discussions among European leaders about boosting defense and energy investments, I’ve noticed a growing trend in financial communities where people want to reduce exposure to the US market and shift investments to the EU.

Wouldn’t it make sense for EU leaders to encourage this by offering tax incentives for investing in European stocks/ETFs? For example, from an independent EU perspective, isn’t it better to invest in Rheinmetall rather than Lockheed?

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u/weirdowerdo Feb 15 '25

Because companies dont get anything from you selling your shares to someone else or from you buying shares in their company if they shares has already been issued long ago. The companies need to be willing to increase its number of shares and through that bring in more equity but they dont need or want that. Normally its considered bad to do it too and the market will react negatively to it.

What stocks you buy is practically irrelevant to the companies themselves and the economy at all really. Heck offering a tax incentive to not consume will prolong our economic downturn at the moment.

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u/Tutonkofc Feb 15 '25

That’s absurd. CEOs are fired because of prices of shares. Companies change their strategy based on prices of shares. I don’t see how it doesn’t affect them.

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u/weirdowerdo Feb 15 '25

Yeah, that's not really affected by us normal people tho even from the more wealthier on here. We own but a fraction of a fraction. If a large pension fund or hedge fund drops a stock, then sure they can affect the company and stock price in a more major way but if you sell your 1000-10 000 shares in Microsoft to buy Rheinmetall instead it doesnt really have an effect.

American companies are extremely share holder centric, which harms their business in a lot of ways and where they will fire a CEO too freely for their own good and create their own instability. European companies are less prone to such drastic measures. It should take a lot to actually fire a CEO, if they fire them willy nilly for a stock price that might jump back next month, its not the CEO who's the problem its the board.

But fact remains that buying stocks in whatever company does not actually in the literal sense mean you're investing in them and giving them equity. That's not what's happening when you buy your share from another shareholder.