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Dumb Ol\' Debt Featured

I\\\'m going to miss J.C. Penney and Dell when they\\\'re gone. They are part of my youth. Oh, they might not be gone in the next year or two, but their prospects are less favorable now that the tax bill changes the amount of debt that businesses can deduct. Debt is dumb. It will do you in eventually. It\\\'s like smoking, in that way. But just like smoking, all the cool kids do it and instead of looking at the dead and disabled, all we see is Keith Richards, puffing away at 74.  And like smoking, the government has subsidized debt over the years. The most obvious example is the mortgage deduction. Mortgages are debt that are treated as savings in part because of the tax deduction. Auto credit is treated as nothing, but debt. This was not the case before the federal government started promoting home ownership.  The federal government also promotes debt at the state level. The mortgage and property tax deductions promote higher debt in high tax states. These high-tax states also make bond purchases more attractive, since those are tax-free. So in addition to tax revenues, these states can borrow a lot of money to fund everything from social programs to pensions.  It\\\'s not debt, though, it\\\'s an investment. That\\\'s what government officials, home owners and businesspeople all tell themselves. But no, it\\\'s debt.   

Ted Craig

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Auctions Across America Fall 2017