Tax policy is often thought to be constrained by asset mobility, where firms with easily movable assets can avoid taxes, leaving immobile ones targeted. However, this paper reveals a new twist: publicly traded companies lose significant value in financial markets when taxed more heavily, even if their underlying assets are immobile—a phenomenon termed 'financialization.' This shareholder concern reduces government incentives to tax these specific firms.

The study argues that broad stock market participation and democratic institutions amplify political sensitivity to such financial losses. As a result, the focus on politically mobile versus immobile firms becomes more complex. Financialized firms create additional constraints on taxation beyond just asset mobility.

This finding has implications for understanding policy autonomy, corporate ownership structures in democracies, and how economic voting influences tax decisions.