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..

Experts Warn of Negative Impact on Entrepreneurs if Deduction of Interest Expense Is Eliminated

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Virtually every company in America relies on credit to finance investments–be it to upgrade equipment, open new facilities, meet payroll, or hire more talent. The ability to deduct the interest expense related to the funding of these activities has allowed businesses across all sectors of the U.S. economy to grow and remain competitive for close..

Newsmax: The Tax Reform No One Is Discussing: Opposing View

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By Mac O’Brien, Spokesperson, BUILD Coalition In his December 20 piece entitled “The Tax Reform No One Is Discussing,” author Scott MacDonald employs a series of dubious assumptions and misleading examples in recommending the elimination of interest deductibility from the tax code. The truth is that such a reform would be anti-growth and harmful to..

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..

Interest Deductibility: A Building Block for Growth – VIDEO

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Interest Deductibility: A Building Block for Growth from BUILD Coalition on Vimeo. As Congress begins to ramp up its efforts to reform the tax code, it is important that policymakers understand that any call to limit interest deductibility should be a non-starter in the discussion. Watch the video above to learn more about how important..

Issue Brief: Debt Financing Benefits Companies In All Sectors of the Economy

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Businesses in all sectors of the economy use debt to grow (see the benefits of debt to companies here). From professional services, retail trade, and manufacturing to construction, wholesale trade, and financial services, all industries use debt financing to build a new factory, invest in new technology, manage payroll, and finance many other business activities…