GOP proposal to scrap interest deduction would have profound impact on debt-reliant businesses
Republicans looking to rewrite the U.S. tax code are taking aim at one of the foundations of modern finance—the deduction that companies get for interest they pay on debt.
That deduction affects everyone from titans of Wall Street who load up on junk bonds to pay for multibillion-dollar corporate takeovers to wheat farmers in the Midwest looking to make ends meet before harvest. Yet a House Republican proposal to eliminate the deduction has gotten relatively little sustained public attention or lobbying pressure.
Thanks in part to the deduction, the U.S. financial system is heavily oriented toward debt, which is cheaper than equity financing and widely accessible. In 2015, U.S. businesses paid in all $1.3 trillion in gross interest, according to Commerce Department data, equal in magnitude to the total economic output of Australia.
Getting rid of the deduction for net interest expense, as House Republicans propose, would alter finance. It also would generate about $1.5 trillion in revenue for the government over a decade, according to the Tax Foundation, allowing for investment breaks and rate cuts elsewhere in the tax code.
The dollars at stake are even more than another controversial proposal being pushed by House Republicans known as border adjustment, which would tax imports and exempt exports. The border adjustment plan has been under attack from retailersand Republican senators, whose resistance h as put it on the brink of failure. But the idea of eliminating or limiting the interest deduction has generated less vocal opposition, giving it a real chance of passage, perhaps in a scaled-back form.
“The overall goal is to be pro-growth. What we’re proposing is to take the tax preference from the source of funds, borrowing, and take that preference to the use of funds, business investment and buildings, equipment, software, technology,” Rep. Kevin Brady (R., Texas), the author of the plan, said at The Wall Street Journal CFO network this month.
Ernest Littlebird put his grill out on the side of Route 39 in Lame Deer, Mont., under the shade of a tree and started grilling hamburgers.
“Come get a dollar burger,” he says. “Good meal, you know, something to put in the belly at least.”
Littlebird is an entrepreneur. This is his second year selling dollar hamburgers out of his minivan when he couldn’t find other work. Jobs are scarce here on the Northern Cheyenne Reservation and so is money.
But Littlebird thinks they don’t have to be.
When he can’t find work, Ernest Littlebird makes his own, selling hamburgers for a dollar along Route 39 just near Lame Deer, Mont. “We’ve got to do something,” he says of the tribal economy.
Shane Thomas McMillan for NPR
The Northern Cheyenne Reservation sits on one of the richest coal deposits in the country. There are billions of tons of the black rock buried underneath Littlebird, Lame Deer and the surrounding pine-dotted prairie. In some places, it’s so easy to access that coal developers have told tribal members it could be scraped up with a spoon.
But despite high unemployment and systemic poverty, the Northern Cheyenne Tribe has never touched the coal. It has spurned developers and scuttled plans. Most recently, it sued the Trump administration for opening up the opportunity for new coal development in its corner of southeastern Montana.
The land here is sacred to the tribe. Retaining culture is crucial. And tribal leadership says it’s committed to finding long-term economic opportunities for its members, not the boom-and-bust cycle of extractive industry.
But with the Trump administration pushing for new coal development, some on the reservation are wondering whether the tribe should finally cash in on the resources buried beneath their feet.
“We’ve got to do something,” Littlebird says.
Russia is at the centre of another doping scandal after it emerged the country’s entire 23-man 2014 World Cup squad is being investigated by Fifa over possible drugs offences
Leo Varadkar, the gay son of an Indian immigrant, rises to power in a once conservative nation. It’s complicated
If you perused the international headlines last week, you might have heard that Ireland has its first openly gay prime minister, who also happens to be partly of Indian descent. (His father was an immigrant.) That this could happen in a once deeply religious and conservative society like Ireland — which remains overwhelmingly white and Roman Catholic — sounds like a huge win for progressives. Right?
Well, not exactly.
Two assumptions were underlying much of the international coverage of Leo Varadkar’s election as Taoiseach (as the prime minister is called in the Irish language). First, that he was elected by the people (which he wasn’t), and second, that because he’s the gay son of an Indian immigrant, he’s also what Americans would consider a a progressive (which he’s not).
Irish people were equal parts amused and confused by the foreign coverage of this event, because the way Varadkar ended up in the top job was less dramatic and exciting than it sounded in the headlines.
There was no general election. Ireland is a parliamentary democracy, and when former prime minister Enda Kenny resigned the governing party, Fine Gael, chose Varadkar to replace him as party leader. This in turn made him our new Taoiseach (pronounced TEE-shuck, more or less).
Fine Gael is a center-right party xwith a neoliberal economic agenda, and certainly not teeming with social progressives. Yes, it is undoubtedly a step forward that Varadkar was even elected by his party members — and that Irish people, by and large, are not even remotely bothered by or interested in his sexuality. But that’s about where the progressive character of this change begins and ends.
The reality is that Varadkar is a conservative and has made some highly questionable comments about things like abortion and LGBT rights.
How one band is trying to make it in a music industry turned upside down
It’d been five shows in five states in the past nine days, and now Mario Cuomo and his band mates slouched in patio chairs outside an unfamiliar bungalow, giving no hint of the huge stakes of the backyard gig they were about to play. They sipped tequila and vodka from red plastic cups. They fiddled with their phones. None of them seemed worried that their bassist was missing, last seen earlier at the motel.
“He thought we were coming back for him,” said Cuomo, the lead singer. “But nah.”
Although they were playing it cool, Cuomo and the others knew this could be a pivotal moment in their careers. Most of the people pouring into the back yard were not ordinary fans. Some had probably never even heard of their rock band, the Orwells.
But this parade of hip T-shirts, skinny jeans and untucked button-downs represented a powerful group: They licensed songs for films, TV, ads and video games. And in an era when few people buy music, a show such as this was vital, maybe even more valuable than a record deal.
“We’ve got to license some stuff today,” Cuomo, 23, said to guitarist Dominic Corso as they watched the crowd grow. “It’s business, Dom. L.A. is all business.”
The Orwells were five friends from the Chicago suburbs grappling with what it takes to succeed in a music business undergoing dramatic change — one that has ramifications not only for music creators but also for the listening public. Last year, the U.S. music industry saw its largest spike in recorded music revenue in nearly two decades, driven by a surge in online song streaming. It was a remarkable reversal from just 10 years ago, when the online distribution of songs threatened to crush the industry. But this change in fortunes has created a new set of winners and losers.
The latest episode of Bite podcast journeys into the brave new world of better-tasting veggie burgers.
But can these Silicon Valley startups take on the multibillion-dollar meat industry? On a recent episode of Mother Jones‘ food politics podcast, Bite, we looked at fake-meat makers that are trying to scale up—and I attended a college class about making meat alternatives. Listen here:
33 – Inside Silicon Valley’s Race to the Best Fake Meat33 – Inside Silicon Valley’s Race to the Best Fake Meat
Impossible Foods has big plans for its wheat, coconut oil, and potato patties—the burgers that bleed. Right now, just 22 restaurants serve them. But last spring, Impossible Foods unveiled its weapon of mass production—a 67,000-square-foot warehouse in Oakland, California. The company’s chief operating officer, David Lee, said the factory will allow Impossible Foods to pump out 4 million burgers every month—that’s 250 times current production.
“We know our demand is waiting for us,” Lee said. “Not just in fine dining, but in more accessible restaurants around the world.”
Although these companies may not yet have the financial power of the meat industry, their products appeal to a growing number of eaters concerned about their health and that of the environment. Indeed, in 2015 the World Health Organization declared red meat a probable carcinogen. Animal agriculture across the globe is responsible for a whopping 14.5 percent of greenhouse gas emissions.