If Congress Wants The Support Of The Middle Market, It Should Maintain Interest Deductibility

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This week, the Association for Corporate Growth (ACG) held its 2017 Middle-Market Public Policy Summit, where lawmakers and business leaders met to discuss the new political landscape and how public policy can promote the growth of the middle market. One important topic that came up was interest deductibility (ID). The middle market covers roughly 200,000..

Setting The Record Straight On Interest Deductibility In The Economist

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In its February 2 piece entitled “What If Interest Expenses Were No Longer Tax-Deductible?“, The Economist incorrectly describes interest deductibility (ID) as a tax break that makes the economy riskier by encouraging debt financing. This is a simplistic view that mischaracterizes a fundamental feature of our economic system—one that has helped to drive growth in the..

BUILD STATEMENT ON SENATE FINANCE WORKING GROUP REPORTS

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The BUILD Coalition’s Sabrina Siddiqui released the following statement in reaction to release of the Senate Finance Committee Tax Reform Working Groups’ reports: “The BUILD Coalition supports continued progress to enact tax reform that would boost growth and create jobs.  It is noteworthy the report acknowledges that many ‘economists – and many in the business community – have..

Setting The Record Straight: The Economist’s “The Great Distortion” Misses The Mark

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Dr. Rebel Cole, Professor of Finance at DePaul University’s Driehaus College of Business, has issued the following statement in response to an article in The Economist entitled “The Great Distortion:” The Economist‘s piece misses the key point that allowing firms to deduct interest payments enables firms to raise capital needed for new investments. Limiting interest..

Issue Brief: Why Businesses Use Debt

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The following examples are drawn from Dr. Rebel Cole’s “Why Businesses Use Debt – And How Businesses Benefit From Debt.” Private business Chez José is a small restaurant owned by its proprietor—José Smith. Last week, José learned that he needs a new roof on his building, and that this will cost him $10,000. Unfortunately, José..

Primer: The Importance of Interest Deductibility to Businesses and the Economy

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View pdf here. The stated goals of tax reform are to boost the U.S. economy, increase investment, create more jobs, and foster innovation. With a cumbersome, outdated, and bloated tax code, reform has the potential to provide a significant boost to the U.S. economy. However, focusing solely on lowering rates may lead to harmful policy outcomes. This primer..

Setting The Record Straight On Interest Deductibility And Nonfinancial Leverage

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Businesses use credit to grow, manage payroll, and make job-creating investments. It’s fundamental to business. However, proponents of a new tax targeting interest on debt have often argued that interest deductibility distorts incentives, which might lead to too much credit in the economy. While this new tax will raise costs for businesses onnew investments, correcting..