The Coalition for America’s Interest brings together voices united in support of ensuring American businesses have the access and flexibility they need in order to remain competitive, continue to employ workers, and navigate the current economic and health crisis.
Currently, EBITDA (earnings before interest, taxes, depreciation, and amortization) will be changed drastically, which will hurt capital-intensive businesses, making it more difficult for them to raise capital for investment and employ workers. If this tax increase moves forward, it will threaten small businesses, jobs and economic growth.
We are fighting to ensure Congress extends the current provision that allows businesses to add back their depreciation, depletion, and amortization deductions when determining their business interest expense limitation. This will allow them to access capital and provide them flexibility in meeting their business needs as they navigate the current economic and health crisis.
EBITDA (earnings before interest, taxes, depreciation, and amortization) is a common financial accounting metric used to evaluate a business’s economic strength and ability to service debt across sectors.
Many capital-intensive businesses and manufacturing companies will see an increase in their tax liability and financing costs due to a scheduled change in the determination of the business interest limitation. This change will disproportionately harm capital-intensive businesses, such as manufacturing companies, because their interest expense deduction limitation will decrease based on a portion of their depreciation and amortization deductions.
The lowered limitation will increase the cost of financing for capital-intensive businesses, making it more difficult for them to raise capital for investment, hire new workers, and grow. Further, the uncertainty surrounding the current pandemic and associated economic crisis means that companies in many valuable sectors will have reduced flexibility and liquidity when responding to, and attempting to recover from, the crisis.
Tell Congress: Extend the Current EBITDA Provision