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Old 04-15-2008, 09:02 AM   #5 (permalink)
loquitur
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Someone forgot employment and training services for high wage occupations, increasing literacy and basic skill levels of low-income parents (including GED services) and a myriad of other programs that are necessary to address the issue of poverty directly. The negative income tax is kinda interesting, though.
Why is that the govt's responsibility? People should use their money (including negative income tax payments) as they see fit.

On the corp income tax, the point is that it's distortionary and that corporations don't exist. People exist. Tax the people who get the income. Taxing corporations leads to nonproductive allocation of resources to tax-favored rather than tax-disadvantaged uses. For example (and this is the clearest one) there is no necessary reason to prefer leverage to equity, but if the govt is picking up part of the cost of capital, which it does through the deductability of interest expenses, then there is a reason for the preference. My own view is that some transactions would benefit from equity and some from debt, and that it makes no sense to thumb the scale. Companies can get into trouble from too much debt, and the tax system shouldn't be encouraging them. And no, eliminating the deductibility of expenses isn't the answer either, because that also is distortionary and will bring its own set of problems, like creating incentives for issuing preferred stock rather than common.

Last edited by loquitur; 04-15-2008 at 09:10 AM..
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