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When people raise Animats' argument, the beneficiaries of the relative tax rate imbalance typically make an argument like: "Oh, you couldn't possibly increase t
by dfabulich 9y ago
When people raise Animats' argument, the beneficiaries of the relative tax rate imbalance typically make an argument like: "Oh, you couldn't possibly increase the tax rate on interest paid. Any absolute increase in the tax rate will make corporations refuse to borrow, ruining the economy."
Animats was attempting to anticipate this argument with a counter argument: corporations don't seem to care what the absolute tax rate is; they only care what that rate is relative to the alternatives. So we should feel free to set all of those tax rates equal, raising taxes on interest paid.
- Animats 9y agoI'd argue that we need to tax corporate dividends, interest paid, and stock buybacks at the same rate. That rate could be set to be revenue neutral. Dividends taxed less, interest and stock buybacks are taxed more. All the ways businesses pay for their capital should be taxed at the same rate.
- igravious 9y agoInteresting. Would there be any other avenues available or would your solution be all that is needed? But isn't this missing the forest for the trees anyway? To use an aquatic metaphor, isn't this like plugging a leak in a dam with your finger when the entire structure is unsound and needs re-engineering?
- chillydawg 9y agoThe instability comes from piles of biases created by rules, exactly like this. Addressing these biases and correcting clearly ridiculous incentives will slowly correct overall behaviour, if enough rules/rates/whatever are tweaked in a better direction.