U.S. Sen. Shelley Moore Capito (R-WV) joined U.S. Rep. Ron Estes (R-KS) in unveiling a bicameral bill on March 26 that would restore globally competitive interest deductibility standards in an effort to help unleash domestic investment for companies headquartered in the United States.
“U.S. based companies are at a disadvantage when competing in global markets for leveraged acquisitions, as foreign-headquartered rivals often benefit from more favorable interest deductibility rules and can therefore finance transactions more efficiently,” Sen. Capito said. “This bill will help ensure pro-growth policy by increasing globally competitive interest deductibility standards and will help unleash domestic investments for U.S. companies.”
Sen. Capito sponsored the Ensuring Better Interest Treatment and Deductibility Act (EBITDA), S. 4221, with three original GOP cosponsors, including U.S. Sen. Marsha Blackburn (R-TN). In the House, Rep. Estes sponsored the same-named H.R. 8101, alongside 12 original Republican cosponsors, including U.S. Reps. Adrian Smith (R-NE), Kevin Hern (R-OK), Blake Moore (R-UT), Randy Feenstra (R-IA), Carol Miller (R-WV), Jodey Arrington (R-TX), Darin LaHood (R-IL), and Vern Buchanan (R-FL).
“As it currently stands, our tax code is penalizing American businesses for growing — when a manufacturer borrows money in the United States to expand their global business, they shouldn’t be slammed with a surprise tax bill because they’re investing in their operations,” Rep. Estes said. “This common-sense solution restores the post-TCJA landscape that encourages investment and makes it easier for job creators to innovate, increase opportunities, and keep America competitive on a global stage.”
Currently, U.S. businesses are prevented from including global income (Subpart F income, GILTI inclusions, and Section 78 gross-up amounts) from their Adjusted Tax Income (ATI), which the lawmakers say undercuts the restoration of the EBITDA standard.
The provision shrinks the ATI base and reduces allowable interest deductions, even when such global income is fully subject to U.S. tax, and undercuts the key pro-growth outcome in the law, they added.
If enacted, the Ensuring Better Interest Treatment and Deductibility Act would build upon the pro-U.S. business policies in the One Big Beautiful Bill enacted last year by repealing the ATI limitation exclusion of global income, allowing U.S. companies to remain competitive on the world stage, said the lawmakers.
The legislation is supported by the National Association of Manufacturers, the U.S. Chamber of Commerce, Celanese, Asurion, Dell Technologies, Illinois Tool Works, and the American Chemistry Council.