Industrial Insight

Our tax code encourages debt, not capital investment… | February 15, 2010

http://www.ft.com/cms/s/0/52cddeb6-199b-11df-af3e-00144feab49a.html?nclick_check=1

Edward Gottesman

“Inflation-fuelled debt is encouraged by deductibility of interest in assessing corporate tax. High returns to leveraged capital helped create the over-sized finance sector that became a breeding ground for the financial crisis. Periodic deflation would reverse that asymmetric bias. It need not spiral downward. Recent experience shows that deflation can be controlled by monetary and fiscal policies. Stimuli should focus on income-producing investment, not consumption.”


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About author

I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.

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