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 With a cumbersome, outdated, and bloated tax code, reform has the potential to provide a significant boost to the U.S. economy.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..
1. What is interest deductibility? Interest deductibility refers to the ability of businesses to deduct the interest paid on debt from their taxable income. This 100-year old component of the tax code allows businesses to deduct interest payments from loans or other forms of debt as a cost of doing business. 2. What kinds of..
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 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..
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…
In the political discussion surrounding interest deductibility, some have attempted to cast all debt as a bad thing. They wish to insert this narrative in order to portray a limit on interest deductibility as a basis of tax reform. However, lost in the rhetoric and political discussion are many benefits debt provides businesses. Debt provides..
Interest deductibility allows businesses to deduct interest on debt from their taxable income. As a cost to doing business, interest has been 100 percent deductible since 1913. It is a core component of the tax code. Below are four representative case examples showing why businesses could use debt and how it is critical to economic..
The BUILD Coalition welcomes the promise of tax reform, but a new tax targeting interest is simply not reform. True reform works to improve the U.S. economy and create jobs rather than raise costs on businesses. Interest deductibility is critical to the U.S. economy. Below are key facts about interest deductibility. WHAT IS INTEREST DEDUCTIBILITY?..
Interest deductibility is a component of the tax code that has helped businesses of all sizes use debt to finance investments. Typically, we think of large companies using debt. This is certainly true especially amongst firms with large capital-intensive investment needs. Businesses in the manufacturing, transportation, and construction industries have large capital needs and therefore,..
Advocates for limiting interest deductibility have argued that if the revenue finances lower rates, then the impact is neutral. Drs. Robert Carroll and Thomas Neubig analyzed this scenario, specifically by looking at the net impact of the across-the-board limitation on corporate interest expenses proposed by the Wyden-Coats tax plan combined with a revenue neutral 1.5 percentage point..