September 14, 2015
By Paula Dwyer
Buried deep in Jeb Bush's tax plan is a 15-word bombshell that has gone largely unnoticed in the days since it was unveiled. The Republican presidential candidate proposes to eliminate the deduction that corporations take for interest expenses, thus closing off a tax break that saves U.S. companies billions of dollars a year.
This is huge. And while it has merit, it's also so disruptive to the way companies finance themselves that it could destroy value and, along the way, create new and unpredictable economic distortions. It could even result in less, not more, corporate investment -- the opposite of what Bush thinks he's achieving.
Bush's plan will upset businesses that are highly leveraged, but he's right that the tax code should be more neutral. Currently, companies finance themselves by issuing stock or by borrowing, which can be via a bank loan or a bond issuance.
Read the full article at Bloomberg View: Does Jeb Bush Really Want to Upend the Bond Market?