MSCI Asks Congress To Preserve EBITDA Standard

The Metals Service Center Institute has joined the National Association of Manufacturers (NAM) and 81 other trade associations in sending a  letter calling on Congress to preserve the earnings before interest, tax, depreciation, and amortization (EBITDA) standard.

Current law limits businesses’ interest expense deductions to 30 percent of EBITDA for tax years through 2021. Starting in 2022, interest deductions will be limited to 30 percent of earnings before interest and tax (EBIT). By excluding depreciation and amortization, the stricter EBIT standard will make it more expensive for capital-intensive companies to finance critical purchases and grow their businesses.

The letter argued that the “lowered limitation will make it more difficult for these job creators to raise capital, hire new workers, and grow” and “the reduction in flexibility and liquidity caused by the change will also harm businesses’ ability to recover from the economic damage caused by COVID-19.”

Bipartisan legislation to preserve EBITDA already has been introduced in the U.S. House of Representatives. The Permanently Preserving America’s Investment in Manufacturing Act, written by Reps. Joseph Morelle (D-N.Y.) and Adrian Smith (R-Neb.), would set a permanent EBITDA standard for interest deductibility.

Stay tuned to Connecting the Dots as this story develops.