Subsidy

Reader comment on: Seven Myths About Romney's Taxes

Submitted by K. Williams (United States), Jan 24, 2012 09:50

"The deductibility of interest expense is another government subsidy to private equity. Critics focus on the deductibility of interest expense. But they forget the other side of it — that interest income is taxable to the recipients. Don't worry, the government is getting a piece of the action. It almost always figures out a way to do that."

This is ridiculous. When companies use equity to fund deals, and pay dividends rather than make interest payments, the dividend income is taxable to the recipients, just like the interest income. But companies can't deduct dividend payments like they can deduct interest payments. And that difference is exactly why the deductibility of interest expense is, in fact, a subsidy to private equity. At least get your facts straight.


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Other reader comments on this item

Title By Date
Waste of Time [9 words]BlakeJan 24, 2012 13:33
Myth No. 4. Applying the long-term capital gains rate to carried interest is a government subsidy [54 words]BobJan 24, 2012 10:49
⇒ Subsidy [126 words]K. WilliamsJan 24, 2012 09:50
Why miss out the biggest myth ? [276 words]Lee MooreJan 24, 2012 09:28
Your #4 is incorrect [129 words]Fast EddieJan 24, 2012 09:17

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