Bloomberg Tax
June 10, 2019, 8:45 AM

Debt Still Holds Allure for Companies Despite Tax Law Restriction

Lydia O'Neal
Lydia O'Neal

A part of the 2017 tax law meant to curb companies’ staggering use of debt to finance their activities isn’t doing that—partly because the provision, one of the law’s few big revenue-raisers, is full of holes.

U.S. corporate debt has risen above $9 trillion, raising fears of systemic financial stability risk. A provision in the law was meant to cut down on multinationals’ practice of borrowing from affiliates in low-tax jurisdictions, paying interest to those foreign affiliates, and then deducting those payments at home. Lawmakers also intended for the provision to shift companies away from debt and toward ...

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