Is taxing debt a good idea?

Paul Volcker thinks so; I don’t know, but it’s an interesting idea that would be a sea change in U.S. corporate finance. Here’s a great WSJ chart on how the U.S. has one of the highest corporate tax rates in the developing world, but collects a relatively small share of revenue.


I’m not sure I get how this math works, though:

Headed by former Federal Reserve Chairman Paul Volcker, the bipartisan presidential tax-policy panel also is examining the way multinational corporations pay taxes. The group is considering whether to replace the current system, which taxes global income, with one that taxes only profits generated in the U.S. Such a move could provide more revenue for the Treasury by simplifying a system that has provided multinationals multiple ways to navigate transborder tax rules to minimize payments to the government.

Such changes could raise tens of billions of dollars in tax revenue.

Via Felix Salmon.

The first tech bubble? 1720

Robin Hanson passes on this well-reasoned argument that tech bubbles preceded dot-coms by several centuries:

Although 1720 is not generally viewed as a period of technological novelty, we argue in this paper that there were at least three critical innovations that took place in a very short span of time; two of which were financial innovations, the other was a major potential shift in the configuration of global trade. The first innovation was financial engineering at a national scale. The Mississippi Company and the South Sea Company issued equity shares in exchange for government debt; in effect converting the national debt into corporate stock. …

The second innovation was an incipient shift in global trade. Both of the companies were set up to exploit trade in the Americas. … The third innovation was also financial. The first publicly traded insurance corporations were chartered in Great Britain 1720, as a result of the Act. As such, they represented a new model of capital formation for maritime insurance firms – in a nation built on maritime trade.

These do seem like indisputably valuable innovations in the long-run (like, say, ATMs, as opposed to securitization).

(or has securitization just passed through its initial collapse, preceding a long and fruitful contribution to human economic activity?)

I would be interested to see similarly far-reaching historical analysis on commodity cycles. I have the impression that real commodity prices have fallen throughout human history, but I lack the facts to back it up.