John Carney of CNBC fame writes: The White House released its plan for reforming taxes on business last week. The 23-page document is long on diagnosing the problems with the way we currently tax business, but falls short when it comes to details about the administration’s proposed cures. The tax rate would be lowered and tax breaks would be eliminated—although which ones aren’t specified.
One tax break that is singled out by the report is the deduction for interest payments on the debt of businesses.
“The current corporate tax code encourages corporations to finance themselves with debt rather than with equity. Specifically, under the current tax code, corporate dividends are not deductible from corporate taxable income, but interest payments are. This disparity creates a sizable wedge in the effective tax rates applied to returns from investments financed with equity versus debt….”
Read more at http://www.cnbc.com//id/46542402
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