As tax debate heats up, Republicans tweak
business interest plan
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[August 23, 2017]
By David Morgan
WASHINGTON (Reuters) - Congressional
Republicans, seeking to address the complaints of small businesses, are
floating changes to their controversial proposal to eliminate business
tax deductions for debt interest payments, business lobbyists said on
Tuesday.
A top U.S. Republican on tax policy acknowledged that modifications are
in the works, but did not provide details.
The debt interest proposal, long seen by Republican policymakers as
necessary to help drive economic growth, is backed by large companies
with ready access to equity financing that they could substitute for
debt if eliminating the interest deduction made issuing debt too costly.
Debt-dependent small business owners, farmers and ranchers don't have
that luxury.
As Republicans in Congress and the Trump administration slog ahead with
a push to overhaul the U.S. tax code, a key task is figuring out how to
resolve conflicting groups' priorities, with business debt interest a
clear example.
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The tax code has not been overhauled since 1986, partly because
reconciling these conflicts can be so difficult.
"We've asked businesses large and small to look at that, test drive it
and give us back their feedback," House of Representatives tax committee
Chairman Kevin Brady said in remarks at an event in Louisville, Kentucky
on Tuesday, without offering specifics about the modified proposal.
His staff at the committee had no comment.
Businesses lobbyists said the panel's lawmakers have quietly agreed to
focus on exemptions for small businesses, including farmers and
ranchers, and an exemption for land.
Lawmakers have also discussed a possible partial elimination of the
interest deduction, with an exemption for existing debt, or eliminating
the deduction only for businesses deemed to have an excessive amount of
debt, according to lobbyists.
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![](../images/082317pics/news_z47.jpg)
U.S. Representative Kevin Brady (R-TX), chairman of the House Ways
and Means Committee, sits for an interview about upcoming tax
legislation proposals with Reuters journalists in Washington, U.S.
July 19, 2017. REUTERS/Jonathan Ernst
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Brady is one of the "Big Six" negotiators from Congress and the
Trump administration who are guiding the tax reform debate.
At the Louisville event, he described rolling back the business
interest deduction as a "trade-off" for another proposal to
accelerate expensing, which would allow businesses to write off
investments in plants and equipment more quickly.
He said net interest deduction is one of a number of tax breaks that
lawmakers are looking to eliminate to help pay for lower business
tax rates. Republicans say tax cuts will help drive annual U.S.
economic growth above the 3 percent mark.
Independent analysts say that eliminating the interest deduction
would raise more than $1 trillion in federal revenues.
Republicans want to cut the corporate income tax rate to 20-25
percent from 35 percent. But they have been hard-pressed to pay for
such a cut since jettisoning a border adjusted import tax that would
have raised more than $1 trillion.
(Editing by Kevin Drawbaugh and Cynthia Osterman)
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