While companies use both debt and equity financing, most of governments rely on

debt financing such as issuing sovereign bonds. On the other hand, governments tax the

individuals and companies to support the promised payment of sovereign bonds issued. For

most of the countries, the tax structure is like equity, i.e., the payoff is based on entity's profit.

Briefly discuss the logic for government to use 'debt' format for financing while using 'equity'

format to tax entities.

Answer rating: 100% (QA)

Youre right theres an interesting dynamic between how governments raise money debt and how they collect it taxes Heres why it works this way Advantages of Debt Financing for Governments Spreads Costs ... View the full answer