Ohio businesses: Treasury rules would hurt job creation

A group of Ohio employers is warning that the Treasury Department’s proposed debt-equity rules would “significantly impede” their ability to invest and create jobs in the state if the rules are finalized in their current form.

The proposal is “already having a negative impact on Ohio’s business community,” the businesses said in a letter Tuesday to Treasury Secretary Jack Lew. Businesses that signed the letter include Abercrombie & Fitch, Caterpillar and Nestle.

{mosads}The proposed rules would recharacterize some intercompany debt as equity. Treasury released them as part of an effort to limit the tax benefits of companies that participate in “inversions” and move their headquarters overseas for tax purposes. However, businesses and many lawmakers have argued that the rules would affect more than just businesses trying to avoid taxes.

“The proposed regulations will complicate, and in some cases eliminate, our companies’ ability to self-finance our job growth and could obstruct access to capital,” the Ohio businesses said. “The broad language of the regulations creates uncertainty resulting in serious hesitation to make long-term commitments in an already challenging business environment.”

The businesses asked Lew to “take into full consideration the unintended collateral consequences the regulations would have on local economies in Ohio and across the U.S.”

“We urge you to proceed in a manner which gives Ohio businesses and their direct and indirect employees the best chance to prosper and compete,” they said.

Officials at the U.S. Chamber of Commerce, which has been critical of the proposed rules, said that the regulations won’t just hurt businesses in Ohio.

“Businesses in all 50 states could have written letters. It just happens Ohio was first,” the Chamber officials wrote in a blog post on the group’s website. “The bottom line is that these regulations as currently proposed will have deleterious effects rippling across the U.S. economy.”

Treasury has been meeting with stakeholders as the department works to finalize the rules.