This is sweet

[nathanm]

You are straying from the subject. You inferred that Bain and the like get some sort of unfair tax treatment. They don't. They get to deduct their cost of acquiring capital just like everyone else. Again, no different than renting office space.

It's quite different from renting office space. It's renting capital. I'm sure IBM would love it if they could deduct their cost of capital, but they can't since it's in the form of equity rather than debt. Whether you agree with it or not, taxing one form of capital differently than another is in fact a tax preference.

[erfalf]

It's quite different from renting office space. It's renting capital. I'm sure IBM would love it if they could deduct their cost of capital, but they can't since it's in the form of equity rather than debt. Whether you agree with it or not, taxing one form of capital differently than another is in fact a tax preference.

It is the same as rent. It is a capital expenditure that they chose to borrow instead of purchase. They only get to deduct the rent paid, i.e. the cost of capital

Funny you mention a company that has a debt to equity ratio of about 157. Considerably larger than any private equity firm could manage by about 40 times. And the get to deduct every penny of interest, just like PE. The only difference being that I would guess a slightly larger portion of the debt is backed by a hard asset, where as PE may have some more intellectual capital as the backing.

[nathanm]

It is a capital expenditure that they chose to borrow instead of purchase.

Rent is a business expense, the ownership of a corporation is not. There's a clear distinction, as much as you want to try to muddy the waters.