Corporate America’s love affair with debt is driven by a heavy subsidy, courtesy of the federal tax code. It’s an unhealthy preference that the Obama administration is now reviewing.
The problem arises because the interest that corporations pay on their debt is deductible on their federal taxes.
To understand the effect of this deduction, imagine if you could deduct the interest you pay on your debt. I am not just talking about the deduction on your home mortgage. This would be a deduction for all of the interest paid on your credit card bills, auto loans and any other loans you had, including the one from Uncle Mikey….