Issue Briefs

Issue Brief: Interest Deductibility Helps Large and Small Businesses

By | 2013-09-08T15:11:45+00:00 May 16th, 2013|Blog, Issue Briefs|

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,

Issue Brief: Revenue Neutrality And Interest Deductibility

By | 2013-09-08T15:11:51+00:00 May 16th, 2013|Blog, Issue Briefs|

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

Issue Brief: Interest Deductibility And Financial Stability

By | 2013-09-08T15:11:55+00:00 May 16th, 2013|Blog, Issue Briefs|

A common argument for limiting interest deductibility is that it may encourage businesses to take on too much debt, which will increase financial instability. However, this statement ignores some critical facts. First, interest deductibility is not the root cause of debt bias in the tax code. As Drs. Robert Carroll and Thomas Neubig argued, the

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