Yesterday, the Tax Policy Center released its review of Sen. Rubio’s tax plan. In response, BUILD Coalition spokesman Mac O’Brien issued the following statement:
“The Tax Policy Center has joined a growing list of tax experts who are alarmed by presidential candidates’ proposals to remove the ability for businesses to deduct interest expenses.
“In explaining the Tax Policy Center’s analysis of Sen. Rubio’s tax plan, the group’s director, Len Burman, said the proposal amounts to ‘a variant of the value-added tax,’ (VAT) while it eliminates interest deductibility in favor of allowing an immediate write off of investment expenses.
“Proposals like Sen. Rubio’s, which include 100 percent expensing provisions, but eliminate interest deductibility, would only benefit the minority of companies that have capital structures that do not require borrowing to finance new investment. For the majority of businesses of all sizes, financing new investments would become more expensive, and critical incentives to invest and grow would be lost.
“As a number of tax experts have contended, these kinds of proposals would also, effectively, establish a VAT. Since the Reagan presidency, the VAT has been regarded as a method by which governments can efficiently collect and grow revenues while disguising the burden of taxation to the public.
“Tax plans that eliminate interest deductibility and establish a variation of the European-style VAT run counter to the goals of creating a pro-growth, transparent tax system, and should be avoided.”