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AIM Joins Call to Reverse Ruling on Equipment Financing

March 15, 2019
 
AIM joined industry colleagues led by the National Association of Manufacturers (NAM) in urging the Treasury Department to reverse a proposed rule that would make it more expensive to finance the purchase of equipment and machinery. 
 
The Treasury Department has proposed implementing the tax-reform law's new limits on the business interest deduction four years earlier than Congress intended.
 
The Tax Cuts and Jobs Act limited business interest deductions to 30 percent of earnings before interest, tax, depreciation and amortization or EBITDA for tax years starting in 2018 through 2021. However, starting in 2022, the deduction is limited to 30 percent of earnings before interest and tax or EBIT.
 
By excluding depreciation and amortization, the stricter EBIT standard reduces the maximum deduction available to manufacturers, thus making it expensive for capital-intensive businesses to finance capital equipment purchases. Unfortunately, the Treasury Department recently proposed rules that harm manufacturers by effectively implementing the EBIT standard years earlier than intended.
 
The letter calls on Treasury to implement the interest limits in the manner intended by Congress by providing an EBITDA base for the calculation of interest deductions. Doing so would help ensure that manufacturers can continue to invest for growth in the U.S.
 
If you have any questions please contact Brad MacDougall, VP for Government Affairs bmacdougall@aiment.org or sign up here for email updates regarding business tax issues and resources.
 
Please click here to find a copy of the letter featuring all signatories.
 
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