Borrow Now Or Pay Later

Corporations contemplating long-term borrowings later in 2013 or in 2014 should consider closing on the financing before any legislation is introduced that might reduce corporate interest expense so as to benefit from any potential grandfathering of the interest expense deductions.

President Obama and House Ways and Means Chairman Dave Camp (R-MI) have both called for "revenue neutral" corporate tax reform that would reduce the highest marginal corporate tax rate of 35 percent and would reduce or eliminate corporate "tax expenditures." The leading corporate tax expenditures are interest deductions, accelerated depreciation, and the deferral for active foreign earnings. If revenue neutral corporate tax reform becomes reality, corporate interest expense deductions could be reduced.