One of the things that mystifies me is how convinced our congressional monkeys seem to be that Americans want tax reform.
I would argue that most don't care very much about it, although they would like lower taxes.
Who wouldn't.
The people who donate to their campaigns are looking for payback so they want "tax reform" even if it only means laying more debt on future generations.
Wealthy people don't care, they can always take care of themselves.
The idea that these things help anyone but themselves is simply not true.
Take the leveraged buy out tactic that is responsible in large part for our retail issues.
Lots of debt restrict your options.
But if a company is doing well but has undervalued assets, you can buy a majority interest and borrow enough money to buy back all the stock at a great profit, saddling the company with long term debt.
You then issue new stock to raise even more cash at the right time, which of cause goes to the private owners.
The reward is immediate and the pain is long lasting. If in the future the company can't manage them, it has to declare bankruptcy, causing the new stockholders and creditors to lose money.
Works very well for the ones who set it up and not so well for everyone else.
The simple idea is to milk all the value out of a company, like Sears and Toys-R-Us among others and get out while you can. The changes will generate growth and income in the future (ha ha).
Pretty much the way the new "tax reform" republican plan is supposed to work.
Or not, but the wealthy get the money and get to keep it without an estate tax.
No comments:
Post a Comment