Debt vs. Equity – Eisinger in the NYT
I’m quoted in this article. Eisinger’s point is a deeper one: that the tax code’s incentive to create new financial products contributes to the bloat of our financial sector.
And these complex debt securities give society — what? The system we have subsidizes the middleman to create dubious products. Those products help the middlemen — the banks — but they make the financial system more fragile. So the tax code distortion doesn’t just lead to more debt in corporate America and more leveraged banks. It also helps create a finance-heavy economy where the banking sector accounts for a bigger proportion of gross domestic product and corporate profits than it otherwise would.