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Tue Feb 5, 2013, 09:26 PM

"Fixing ‘too-big-to-fail’" by Richard Stallman at Reuters

Fixing ‘too-big-to-fail’

by Richard Stallman at Reuters

http://blogs.reuters.com/great-debate/2013/02/04/fixing-too-big-to-fail/

"SNIP..........................................

I propose another method ­– one that can be applied to all companies. It works through taxes. There will be no need to sue companies and split them up – because they will split themselves up.

The method is simple: a progressive tax on businesses. We tax a company’s gross income, with a tax rate that increases as the company gets bigger. Companies would be able to reduce their tax rates by splitting themselves up.

With this incentive, over time many companies will likely get smaller. They could subdivide in ways they consider most efficient – rather than as decided by a court. We can adjust the strength of the incentive by adjusting the tax rates. If too few companies split, we can turn up the heat.

Big companies can afford clever lawyers. They may try, for example, to pretend to split up into several companies that effectively work together as one. So the new tax law must recognize this and treat such entities as one company that pays the rate for its combined size. As for how to recognize and define such combinations, we can probably borrow solutions from antitrust law.

..........................................SNIP"

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