How can this phenomenon be reigned in and sorted in the medium to long-term?
Far more aggressive progressive taxation.
Far more aggressive progressive taxation.
At least in veterinary care, a major way to buy practices on the cheap is in finding vets who are behind on state taxes.
My point is this isn’t a symptom of closing the carried-interest loophole. It’s fundamental to the business. The fixed costs of administering a veterinary clinic demand scale, and scale thirsts for capital.
Introducing a new fixed cost into a market should not be expected to increase competitiveness. It almost always reduces it. The trade-off with regulation is that trade-off is worth it.
Put another way: if you are a $50mm practice, and it suddenly becomes infeasible to run anything smaller than $40mm, your market power increases. You have less competition.
Why would increasing taxes lower costs for anything? If anything they’d have to raise prices further to compensate for additional tax payments.
This type of myopic thinking is how you get asinine policy like the ACA “cap on profits”. Instead of incentivizing an efficient operation, we’ll have some other accounting shenanigans to pass on profits as some other form of income.