WASHINGTON (July 6, 2017) – Today, the BUILD Coalition submitted a letter to the Senate Finance Committee outlining the need to preserve full interest deductibility for American businesses. The submission highlights how businesses of all sizes and across all sectors rely on the ability to deduct interest expense to access capital that is critical for growth and job creation. The letter also demonstrates the harmful effects of limiting interest deductibility to finance a lower tax rate for businesses.
Below, please find key excerpts from the letter:
- “Interest expense is a normal cost of doing business. The deduction for interest is necessary to measure income properly and has been present in the tax code since the implementation of the modern income tax structure roughly a century ago. Failure to maintain interest deductibility will overstate a business’ taxable income and result in over-taxation. By guaranteeing businesses will not be taxed on the cost of accessing capital, interest deductibility affords us the correct tax treatment and encourages us to continue to invest in growing our businesses and creating more jobs.”
- “As our member organizations prove, businesses of all sizes borrow in order to finance expansions or meet obligations and the ability to deduct interest expense gives business owners the certainty to make critical operating decisions. For many firms, access to credit is essential for working capital, and many of these companies use debt to weather shifts in demand.”
- “In addition to these small businesses, medium and large enterprises also turn to debt financing in large part because of its efficiency and relative speed to market compared to equity financing. Borrowing allows these businesses to respond quickly to market demands and capitalize on new opportunities, whether through revolving lines of credit, bonds, or bank loans. Without access to affordable credit, companies of all sizes will struggle to create jobs and grow the economy.”
The full letter can be found here.