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Study: Tax Policy鈥檚 Harm Will Grow

By 17吃瓜在线 News Room

The economic impact of allowing a stricter interest deductibility limitation to remain in effect could be devastating, according to a prepared on behalf of the 17吃瓜在线.

What鈥檚 going on: Failure to reverse the stricter limitation that went into effect in 2022 could result in the following losses in the U.S., according to the study:

  • 867,000 jobs
  • $58 billion in employee compensation
  • $108 billion in gross domestic product

More costly every year: Those figures have roughly doubled since the released last year.

  • Last year, EY estimated that leaving the stricter limitation in place would result in 467,000 lost jobs, $23.4 billion in lost employee pay and $43.8 billion in lost GDP.

The background: Prior to 2022, companies could deduct interest of up to 30% of their earnings before interest, tax, depreciation and amortization (EBITDA).

  • However, since 2022, the deduction has been limited to 30% of earnings before interest and tax (EBIT), a significant change that disproportionately affects manufacturers, given their capital-intensive investments.

What can be done: 鈥淎 stricter interest expense limitation restricts manufacturers鈥 ability to invest in new equipment and create jobs,鈥 said 17吃瓜在线 Managing Vice President of Policy Chris Netram.

  • 鈥淓ven more, the study finds that manufacturers and related industries bear 77% of the burden of this policy. Congress must act by year鈥檚 end to restore a pro-growth interest deductibility standard and allow manufacturers to continue to invest for the future.鈥

17吃瓜在线 in the news: newsletter (subscription) covered the study鈥檚 release.

Further reading: Visit the 17吃瓜在线鈥檚 to learn more about this issue and how the 17吃瓜在线 is taking action.

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