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tay small in order not to pass thresholds that would trigger tougher rules. The perversity is breathtaking: rules to protect investors encourage firms not to grow.

It is a similar story when it comes to tax. Fifty years ago, a tax to discourage Americans from investing in foreign securities spawned the Eurobond market and launched London’s rise as a financial centre. Now, as rich-world countries huff and puff about offshore tax avoidance, American firms are using corporate structures to minimise their tax bills in plain sight at home. Private-equity firms are among the most adept at playing the tax game: their listed arms use MLP-style structures to sidestep corporate taxes and their executives pay inappropriately low capital-gains tax on their investment profits.

It would be easy to turn this into a morality play about rule-dodging capitalism. That is too simplistic. The rise of listed partnerships and other corporate forms is neither all good nor all bad. MLPs have raised capital quickly for the reconstruction of America’s energy industry; business-development companies (BDCs), another pass-through structure, provide credit to businesses that banks have abandoned; real estate investment trusts (REITs) have helped people manage property portfolios. The need to distribute profits means that these firms are constantly inhaling and exhaling capital rather than storing up cash: market discipline is constantly applied as a result. There is room for competition among corporate structures. Anything that breathes life into listed markets is welcome.

And yet these firms are also troubling to anyone who cares about capitalism. The primary advantage of these structures is that they minimise tax payments. The exemptions that are enabling more firms to become MLPs, BDCs or REITs depend on lobbying. The quirks of tax rules impede mutual funds and many others from investing; they tend to be vehicles for very rich investors. The flow of money out of the companies means that they are difficult to analyse like normal corporations.

When the flow of money is driven by the advantages of corporate forms as much as the businesses inside them, the stockmarket is efficient in only the narrowest of senses. And when the most advantageous investments are denied to large swathes of America, the markets are not truly public.

Policymakers ought to be seeking to end these perversities in two ways. The first is to drive down the corporate-tax rate, as a way of dampening the distortions caused by listed partnerships’ tax advantage. America’s tax rate is higher than others in the rich world (one reason why these structures are less widespread in Europe). This newspaper has argued before that it is better directly to tax investors, workers and consumers.

Second, the regulatory burden on all America’s listed firms should be loosened. Politicians have already recognised the damage that regulation can do to the vibrancy of equity markets: hence the looser listing requirements for “emerging growth companies” (Twitter among them) under the year-old JOBS act. Rather than creating more tiers of firms, with all the odd incentives that entails, better to lighten the rules for everyone. American capitalism is one of the most dynamic forces on the planet; it is better when it is conducte本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。