Monday, Mar 22, 2010
Debt is a liability!
Telegraph: The imminent debt-tax revolution
Here’s a prediction: at some point in the next few years Britain, along with the US, and probably most developed economies, will radically overhaul the way we treat debt in the tax system. We will go from favouring debt – allowing companies to offset it against taxes, remove or raise taxes like capital gains tax – and start to squeeze up the taxes on debt interest.
Posted by flintster1994 @ 08:14 PM (832 views) Add Comment
6 Comments
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1. rumble said...
So when you have money but lack wealth backing it, that's bad. OK, fiat. The money is fraudulent, we're forced to use it, we're forced to pay to use it. Am I getting screwed? I don't mind if I am, as long as it's for my own good.
2. mark wadsworth said...
Yet more lies and propaganda from the politicians.
I agree, there is a modest tax advantage in paying out income as interest rather than dividends, but this is nowhere near as big as they make out and secondly just compensates for the fact that shareholders make capital gains but bondholders don't.
The real clue is when the idiots that pass themselves off as our leaders say in one breath that they'll increase taxes on debt and then with the next breath say that they'll encourage saving - if you tax interest more highly, to even it up with dividends, it'll tend to discourage saving - and in the breath after that they wail about our Hallowed Pension Funds (which is second only to the Greenbelt in the Hallowed-ness stakes) being clobbered, while merrily overlooking that pension funds are the biggest beneficiaries of the corporate tax deduction for interest, so taxing interest more highly would be much the same as Gordon Brown's "pension raid" which was no such thing in real life of course, but it is a mantra in the Daily Torygraphmailexpress that Gordon somehow "raided our pensions'.
TW4T5.
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4. mander said...
Make interest on debt non-deductible and reduce corporation tax makes sense to me.
5. mark wadsworth said...
@ Mander - exactly - in a flat tax world, neither dividends nor interest would be tax deductible at corporate level, but shareholders or bondholders would pay no income tax on their dividends or interest either (tax having been suffered at corporate level).
But you are forgetting Our Hallowed Pension Funds!
6. mountain goat said...
To me the real story is creative hunting for tax revenue sources. The economy is slow, so less tax revenues there. But more income is needed to pay for the bailouts. So taxation will increasingly fall on the equity locked up in homes and perhaps this debt tax.