LBOs are encouraged by tax law. Stop it by stop making interest on debt tax deductible. Equity is an investment and represents ownership interest, and so does debt. From the company's perspective, interest deductiblity increases profits when the company takes on debt.
Homeowner interest deductibility should also stop. Want to incentivize home ownership? Give people the money, leave the tax code alone. You know what would happen then? the rest of the people would rebel, "why are you giving these people money!?" Hiding it in the tax code is just that, hiding, and that's not healthy for an open society.
LBOs are encouraged by tax law. Stop it by stop making interest on debt tax deductible. Equity is an investment and represents ownership interest, and so does debt. From the company's perspective, interest deductiblity increases profits when the company takes on debt.
Homeowner interest deductibility should also stop. Want to incentivize home ownership? Give people the money, leave the tax code alone. You know what would happen then? the rest of the people would rebel, "why are you giving these people money!?" Hiding it in the tax code is just that, hiding, and that's not healthy for an open society.