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re: Latest on BAT & Tax Cut (Reform)

Posted on 2/18/17 at 12:56 pm to
Posted by Lou Pai
Member since Dec 2014
28149 posts
Posted on 2/18/17 at 12:56 pm to
Interest rates for corporations in the House plan. What we have always assumed about cost of capital turns on its head, and companies will begin to de-leverage from where they are now over time. I.E., the whole thing about debt being cheaper than equity.
Posted by Iowa Golfer
Heaven
Member since Dec 2013
10232 posts
Posted on 2/18/17 at 2:02 pm to
Remember I'm a simple guy. I read that editorial that equity financing would become less expensive than debt financing. Why I don't think so is that what was reported as proposed was eliminating interest deduction on capital expenditures, but allowing more aggressive depreciation over a shorter period. Actually I had thought the immediate deduction from capex in the year it was done. These reports were highly speculative, and also suggested carve outs for commercial real estate and banks for obvious reasons.

Also, if tax rates decrease overall, wouldn't the benefit of debt financing be reduced anyway?
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