From Mr Peter D. Hahn.
Sir, In response to Danny Truell and Wellcome's letter (February 19): If I were a union member losing my job (family security and well-being, too) after a public to private buy-out, I would find little solace in thinking that it was all for helping to develop a future medical treatment. If I learned that my taxes were actually subsidising the debt in the same buy-out, I might even start to get upset. If I found out that unlimited interest tax deductions (and low interest rates) offered by my government encouraged such buy-outs, I might even start to get pretty mad. And, if I discovered that it was my union pension plan, my insurance company, and my favourite charity that invested in and encouraged the buy-out firm, I might even try to do something about it. But are these events really connected? If they were, it would certainly be less wasteful for me to give a few bob to medical research directly.
Low interest rates, easy money and tax deductions encourage (excess) borrowing in the City not unlike the home mortgage market - but we took away tax deductions from mortgages and homebuyers are borrowing more than ever. Debt has advantages (and risk) even without tax help. But the question of tax-deductible corporate debt should get a good look over - though I suggest it is not the tax deduction but the corporate tax rate itself that is the culprit.
See full Article, (paid subscription required).
Posts
