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Preserve Business Expense Deductions, Industry Orgs Say 

SEP. 23, 2021

Preserve Business Expense Deductions, Industry Orgs Say 

DATED SEP. 23, 2021
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Agricultural Retailers Association
    AICC, The Independent Packaging Association
    American Apparel and Footwear Association
    American Automotive Leasing Association
    American Chemistry Council
    American Coatings Association
    American Forest & Paper Association
    American Gaming Association
    American Home Furnishings Alliance
    American Investment Council
    American Mold Builders Association
    American Petroleum Institute
    American Short Line and Regional Railroad Association
    American Trucking Associations
    Association For Manufacturing Technology
    Associated Equipment Distributors
    Association of American Railroads
    Auto Care Association
    Biotechnology Innovation Organization
    Brick Industry Association
    CTIA
    Electronic Components Industry Association
    Energy Marketers of America
    Equipment Leasing and Finance Association
    Global Business Alliance
    Association of the Nonwoven Fabrics Industry
    Independent Electrical Contractors
    Independent Lubricant Manufacturers Association
    Independent Petroleum Association of America
    Institute of Scrap Recycling Industries Inc
    International Association of Plastics Distribution (IAPD)
    International Sign Association
    Kitchen Cabinet Manufacturers Association
    Metal Powder Industries Federation
    Metals Service Center Institute
    National Association of Home Builders
    National Association of Manufacturers
    National Association of Printing Ink Manufacturers
    National Association of Trailer Manufacturers
    National Automatic Merchandising Association
    National Community Pharmacists Association
    National Confectioners Association
    National Fastener Distributors Association
    National Lumber & Building Material Dealers Association
    National Marine Manufacturers Association
    National Railroad Construction and Maintenance Association
    National Ready Mixed Concrete Association
    National Restaurant Association
    National Retail Federation
    National Stone, Sand and Gravel Association
    National Waste & Recycling Association
    National Wooden Pallet and Container Association
    Petroleum Equipment Institute
    Plastics Industry Association
    Plumbing Manufacturers International
    S Corporation Association
    Small Business and Entrepreneurship Council
    Small Business Investor Alliance
    Council of Insurance Agents and Brokers
    Hardwood Federation
    Vinyl Institute
    Truck Renting and Leasing Association
    U.S. Chamber of Commerce
  • Code Sections
  • Subject Area/Tax Topics
  • Industry Groups
    Agriculture
    Construction
    Food processing
    Manufacturing
    Mining and extraction
    Retail trade
    Textiles and apparel manufacturing
    Transportation
    Chemicals
    Health care
    Insurance
  • Jurisdictions
  • Tax Analysts Document Number
    2021-36934
  • Tax Analysts Electronic Citation
    2021 TNTF 185-21

September 23, 2021

The Honorable Ron Wyden
Chairman
Committee on Finance
U.S. Senate
Washington, DC 20510

The Honorable Richard Neal
Chairman
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

The Honorable Mike Crapo
Ranking Member
Committee on Finance
U.S. Senate
Washington, DC 20510

The Honorable Kevin Brady
Ranking Member
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

Dear Chairman Wyden, Chairman Neal, Ranking Member Crapo, and Ranking Member Brady:

The undersigned associations, representing thousands of businesses and workers throughout the U.S. economy, write in strong support of permanently preserving the current limit on business interest deductions — which is scheduled to expire in 2022.

Current law limits businesses' interest expense deductions to 30% of earnings before interest, tax, depreciation, and amortization (EBITDA) for tax years through 2021. Starting in 2022, interest deductions will be limited to 30% of earnings before interest and tax (EBIT). By excluding depreciation and amortization, the stricter EBIT standard will make it more expensive for capital-intensive companies to finance critical purchases and grow their businesses.

When the EBIT standard takes effect in 2022, capital-intensive businesses will see an increase in their tax liability and financing costs. The lowered limitation will make it more difficult for these job creators to raise capital, hire new workers, and grow. The reduction in flexibility and liquidity caused by the change will also harm businesses' ability to recover from the economic damage caused by COVID-19. Further, limiting business interest deductions could harm U.S. competitiveness by making the United States an outlier compared to our peers in the OECD with interest limitation rules — none of which employ an EBIT-style standard.

Companies impacted by the change from EBITDA to EBIT will experience major reductions to their eligible interest deductions, large increases in their tax liabilities, or both. According to a recent study conducted by PwC, businesses affected by the change will on average see close to a three-fold increase in their incremental tax obligations.1 The industries most impacted by the change from EBITDA to EBIT are critical to the U.S. economy: the information and manufacturing industries will pay the most in new tax obligations under an EBIT standard, while accommodation and food services (3,462%), mining (2,840%), and transportation and warehousing (2,531%) will experience the greatest tax increases.

Without congressional action, these tax increases will take effect in less than six months. We respectfully encourage you to support investment and job growth at capital-intensive businesses across the country by permanently preserving an EBITDA standard for business interest deductions.

Sincerely,

Agricultural Retailers Association

AICC, The Independent Packaging Association

American Apparel & Footwear Association (AAFA)

American Automotive Leasing Association (AALA)

American Chemistry Council

American Coatings Association

American Forest & Paper Association

American Frozen Foods Institute

American Gaming Association

American Home Furnishings Alliance

American Investment Council

American Mold Builders Association

American Petroleum Institute

American Short Line and Regional Railroad Association

American Trucking Associations

American Welding Society

AMT — The Association For Manufacturing Technology

Associated Equipment Distributors

Association of American Railroads

Auto Care Association

Biotechnology Innovation Organization

Brick Industry Association

Composite Panel Association

CropLife America

CTIA

ECIA (Electronic Components Industry Association)

Energy Marketers of America

Equipment Leasing and Finance Association (ELFA)

Global Business Alliance

INDA, The Association of the Nonwoven Fabrics Industry

Independent Electrical Contractors

Independent Lubricant Manufacturers Association

Independent Petroleum Association of America

Industrial Packaging Alliance of North America

Institute of Makers of Explosives

Institute of Scrap Recycling Industries, Inc

International Association of Plastics Distribution

International Bottled Water Association

International Sign Association

Kitchen Cabinet Manufacturers Association

Metal Powder Industries Federation

Metal Treating Institute

Metals Service Center Institute

National Association of Chemical Distributors

National Association of Home Builders

National Association of Manufacturers

National Association of Printing Ink Manufacturers

National Association of Trailer Manufacturers

National Automatic Merchandising Association

National Cattlemen's Beef Association

National Community Pharmacists Association

National Confectioners Association

National Fastener Distributors Association

National Lime Association (NLA)

National Lumber & Building Material Dealers Association

National Marine Manufacturers Association

National Railroad Construction and Maintenance Association (NRC)

National Ready Mixed Concrete Association

National Restaurant Association

National Retail Federation

National Shooting Sports Foundation

National Stone, Sand and Gravel Association

National Waste & Recycling Association

National Wooden Pallet & Container Association

Non-Ferrous Founders' Society

Petroleum Equipment Institute (PEI)

Plastics Industry Association

Plastics Pipe Institute

Plumbing Manufacturers International

Railway Supply Institute

Resilient Floor Covering Institute

S Corporation Association

Small Business & Entrepreneurship Council

Small Business Investor Alliance

SNAC International

The Aluminum Association

The Council of Insurance Agents and Brokers

The Hardwood Federation

The Vinyl Institute

Truck Renting and Leasing Association

U.S. Chamber of Commerce

USTelecom — The Broadband Association

FOOTNOTES

1Economic Analysis of an EBIT-Based Business Interest Limitation. June 2021. PricewaterhouseCoopers LLP, prepared for the American Investment Council. Available at http://www.americasinterest.com/wp-content/uploads/2021/06/AIC-163j-Report-Final-2021-05-27.pdf.

END FOOTNOTES

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Agricultural Retailers Association
    AICC, The Independent Packaging Association
    American Apparel and Footwear Association
    American Automotive Leasing Association
    American Chemistry Council
    American Coatings Association
    American Forest & Paper Association
    American Gaming Association
    American Home Furnishings Alliance
    American Investment Council
    American Mold Builders Association
    American Petroleum Institute
    American Short Line and Regional Railroad Association
    American Trucking Associations
    Association For Manufacturing Technology
    Associated Equipment Distributors
    Association of American Railroads
    Auto Care Association
    Biotechnology Innovation Organization
    Brick Industry Association
    CTIA
    Electronic Components Industry Association
    Energy Marketers of America
    Equipment Leasing and Finance Association
    Global Business Alliance
    Association of the Nonwoven Fabrics Industry
    Independent Electrical Contractors
    Independent Lubricant Manufacturers Association
    Independent Petroleum Association of America
    Institute of Scrap Recycling Industries Inc
    International Association of Plastics Distribution (IAPD)
    International Sign Association
    Kitchen Cabinet Manufacturers Association
    Metal Powder Industries Federation
    Metals Service Center Institute
    National Association of Home Builders
    National Association of Manufacturers
    National Association of Printing Ink Manufacturers
    National Association of Trailer Manufacturers
    National Automatic Merchandising Association
    National Community Pharmacists Association
    National Confectioners Association
    National Fastener Distributors Association
    National Lumber & Building Material Dealers Association
    National Marine Manufacturers Association
    National Railroad Construction and Maintenance Association
    National Ready Mixed Concrete Association
    National Restaurant Association
    National Retail Federation
    National Stone, Sand and Gravel Association
    National Waste & Recycling Association
    National Wooden Pallet and Container Association
    Petroleum Equipment Institute
    Plastics Industry Association
    Plumbing Manufacturers International
    S Corporation Association
    Small Business and Entrepreneurship Council
    Small Business Investor Alliance
    Council of Insurance Agents and Brokers
    Hardwood Federation
    Vinyl Institute
    Truck Renting and Leasing Association
    U.S. Chamber of Commerce
  • Code Sections
  • Subject Area/Tax Topics
  • Industry Groups
    Agriculture
    Construction
    Food processing
    Manufacturing
    Mining and extraction
    Retail trade
    Textiles and apparel manufacturing
    Transportation
    Chemicals
    Health care
    Insurance
  • Jurisdictions
  • Tax Analysts Document Number
    2021-36934
  • Tax Analysts Electronic Citation
    2021 TNTF 185-21
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