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Politics : American Presidential Politics and foreign affairs
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To: DuckTapeSunroof who wrote (43712)6/9/2010 8:38:35 PM
From: TimF  Read Replies (2) of 71588
 
Likely to lower rates any MORE then it does

My point is that it doesn't lower the top rate, and may not lower rates at all (I'd have to look up the details to tell that, its only obvious that it doesn't lower the top rate).

After all, why should ONE FORM of capital raising - going into debt - be FAVORED by the tax codes over ALL OTHER FORMS of capital raising (such as savings... equity issuance, etc.)?

For personal non-mortgage debt it no longer is (but it used to be before Reagan)

For personal mortgage debt it is. A fact which in direct terms benefits me (because I am a homeowner with a mortgage), but which creates economic distortions, and was a factor (one of many, and exactly how large could be argued) contributing to the housing bubble.

For corporations, well corporations are taxed on profit not revenue. If they have to pay a lot of interest they might not be making any profit. Treating equity equally with debt in this case would be to not tax the equity, either you could make taxes on capital gains from stock holdings, and on dividends, equal to zero, or perhaps more reasonably you could eliminate corporate income taxes. Either way the tax code would no longer favor corporate debt over equity finance.
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