Michael Dell Saw This Coming
The Tax Cuts and Jobs Act – although lowing the corporate tax rate from 35 percent to 21 percent – limits the tax deductibility of interest payments to 30 percent of a company's earnings before interest, taxes, depreciation and amortization (EBITDA). In December, Michael Dell wrote an editorial for The Hill titled, 'Don't leave business in the lurch in tax reform deal'.
Dell said that the bill "severely" limits the current ability of U.S. companies to deduct interest payments. "These new rules would unnecessarily impede growth for American employers that use debt as a capital infusion tool to drive growth and innovation," said Dell. "Changing rules on deductibility without regard for depreciation, pre-existing debt or transition periods will punish businesses that made investments in good faith, forcing them to accept a steep financial burden and unforeseen risks."
Additionally, Dell Technologies was among many companies urging lawmakers to not put limits on the ability of U.S. companies to deduct interest payments.In fact, Dell said such a move would create a tax increase of more than $300 billion over the next 10 years imposed on American businesses.