OPINION: Don’t leave business in the lurch in tax reform deal
While the GOP tax reforms will provide relief to most Americans and businesses, there are still some issues that are a cause of concern for many businesses.
Both the House and Senate bills have provisions severely limiting the current ability of U.S. companies to deduct interest payments. These new rules would unnecessarily impede growth for American employers.
Interest expense is a normal cost of doing business. Interest deductions have been a part of U.S. tax code for roughly a century. American companies have crafted and utilized business strategies that take this into account.
Changing rules on deductibility without taking into consideration depreciation, pre-existing debt or transition periods will punish businesses that made investments in good faith. The current House and Senate limitations on interest deductibility will force businesses to borrow overseas, which could weaken U.S. credit markets and hinder U.S. job growth.
“We are confident the House and Senate negotiators will consider this request that I have heard from many members to grandfather existing debt and allow interest deductions for debt created prior to the effective date of the bill,” said Ray McCarty. “We have expressed this concern to our congressional delegation and we know this is a priority concern for the National Association of Manufacturers as well. That said, we completely and wholeheartedly support the tax cut bill,” said McCarty.