Tax Analysts Blog

Ways and Means Chairman To Cut Corporate Interest?

Posted on Oct 5, 2012

In today's Washington Post Harvard professor Robert Pozen suggests, as I have in a previous post, that a lower corporate rate could be paid for with a limitation in the deduction on corporate interest payments. But who cares what two tax experts think? As I was surfing the net the other day I discovered an August 10 Wall Street Journal interview with Ways and Means Committee Chairman Dave Camp. Interviewer Stephen Moore wrote:

    On the business side, he wants to bring the corporate rate down to 25%, paid for by eliminating certain deductions and green energy tax subsidies "so we're not constantly picking the energy flavor of the month," and perhaps eliminating the tax advantages of debt financing over equity. This would no longer allow businesses to deduct the interest on their borrowing. [emphasis added]
This may be old news but it is big news that went unnoticed in most quarters. For all its advantages, limiting interest would be a radical departure from the status quo that would draw the unending ire of the business community, as it did in Germany when it was first proposed there.

Read Comments (1)

Niclas VirinOct 6, 2012

"eliminating the tax advantages of debt financing over equity" would be best
and easiest acheived by abolishing company tax altogether.

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