[20170927]IF10696_税收改革的关键问题：业务利息扣除和资本支出.pdf

https:/crsreports.congress.gov Updated September 27, 2017Key Issues in Tax Reform: The Business Interest Deduction and Capital ExpensingTwo policy changes that have appeared in the recent tax reform discussions are (1) disallowing business deductions of interest payments and (2) allowing expensing of capital investments. While the discussions are typically framed in terms of trading one policy for the other policy, the analysis presented here attempts to separate the two options where possible, given that each policy change could be enacted independent of the other. Brief Summary of Current Law Currently, businesses are generally allowed to deduct interest costs incurred when borrowing money to finance business activities. The rules and limitations for the deduction are detailed in Section 163 of the Internal Revenue Code (IRC). Business interest has been deductible since the enactment of the modern federal income tax code in 1913. The deduction is consistent with traditional theories of income taxation which call for the deduction of expenses incurred in the generation of income. Businesses are also allowed to claim a deduction for the cost of their investments in physical assets