tag:blogger.com,1999:blog-6948982521501107752.post7000809728388678064..comments2023-10-21T09:03:15.270-04:00Comments on Rogue Economist Rants: The growth of 2B2F banks, and what to expect when they grow much largerRogue Economisthttp://www.blogger.com/profile/03439817966760459091noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6948982521501107752.post-53024544856741674132010-03-25T22:05:31.464-04:002010-03-25T22:05:31.464-04:00Intriguing idea, but it's a double edged sword...Intriguing idea, but it's a double edged sword to tax success. Maybe better to tax undue risktaking when it's just starting out. By the time a firm is successful, it's too late. By then, it's hard to know whether success came because of good management or excessive leveraging.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-23566400115504870862010-03-25T20:18:55.873-04:002010-03-25T20:18:55.873-04:00A very satisfying post, Rogue. May I quote one sen...A very satisfying post, Rogue. May I quote one sentence and offer one thought for you to kick around?<br /><br />"But if through the use of leverage, a firm is able to grow - much, much bigger than its competitors, it is now in a position to either: beat them down, eat them up, or take them to the cleaners."<br /><br />Well written!<br /><br />Suppose we set up a tax system so that everyone's (individual, business, & corporate) tax rate varied with one's own indebtedness. (Imagine we set it up while the economy was still fairly healthy.)<br /><br />When, through the use of leverage, a firm is able to gain ground on its competitors, it suddenly finds itself with <i>higher</i> taxes -- creating an incentive to whittle down its debt and get its tax bill down again, rather than continuing to expand via leverage.<br /><br />So then even the most successful firms need to take an intermission from growth, which gives competitors a chance to catch up. <br /><br />Such a tax might favor competition more than the existing tax, in the business sector. And for the economy as a whole it would create a new tool to use along with Federal Reserve policy, to fight inflation by removing money from circulation.<br /><br />As a bonus, such a tax would help reduce the accumulation of debt.<br /><br />Beat it down, eat it up, or take it to the cleaners?The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.com