NTCA–The Rural Broadband Association this week announced its endorsement of the American Investment in Manufacturing (AIM) Act, bi-partisan legislation which seeks to reinstate the ability to deduct depreciation and amortization for tax purposes after limitations on doing so took effect in 2022.
NTCA contends that, left unchanged, these limitations will hinder companies’ ability to raise capital and the use of resources for further capital investments.
The bill was introduced by Sens. Shelley Moore Capito (R-W.Va.) and Krysten Sinema (I-Ariz.) in the Senate and Representatives Adrian Smith (R-Neb.), Joe Morelle (D-N.Y.), Kevin Hern (R-Okla.) and Brad Schneider (D-Ill.) in the House.
NTCA–The Rural Broadband Association represents nearly 850 independent, community-based telecommunications companies including cable MSOs and ISPs, engaged in deploying broadband connectivity to smart rural communities across the U.S.
In an era of transformative technological developments, regulatory challenges and marketplace competition, NTCA maintains that its members "are advancing efforts to close the digital divide by delivering robust and high-quality services over future-proof...sustainable networks."
As quoted in an Apr. 20 press release, NTCA CEO Shirley Bloomfield commented:
“The ability to maximize resources in difficult-to-serve rural areas is paramount for NTCA members, who provide their communities with affordable and reliable internet services. Now more than ever, it is critical that rural internet service providers have the ability to invest in the technology and employees they need to best serve their communities, and I applaud Senators Capito and Sinema as well as Representatives Smith, Morelle, Hern and Schneider for introducing the AIM Act today.”
Re-instating the EBITDA standard for business interest deductions
A December 2022 Year End letter that NTCA signed in support of similar legislation in the 117th Congress provides further background and information on the nature of the AIM Act legislation.
To wit, the companies and associations undersigned in the letter, of which NTCA is one, affirmed that they wrote "in strong support of re-instating the EBITDA standard for business interest deductions."
The letter points out that debt financing plays an important role in supporting job-creating investments, but that a stricter limitation on the deductibility of interest payments on business loans took effect at the beginning of 2022.
As further explained by the letter:
Prior to January 1, 2022, businesses’ interest expense deductions were limited by section 163(j) to 30% of their earnings before interest, tax, depreciation, and amortization (EBITDA). Interest deductions are now limited to 30% of earnings before interest and tax (EBIT). By excluding depreciation and amortization, the stricter EBIT standard makes it more expensive for capital intensive companies to debt finance and grow their businesses.
Under an EBIT standard, capital-intensive companies face higher taxes and increased financing costs. This reduces their flexibility and liquidity when financing needed investments, ultimately making it more difficult for these job creators to raise capital, hire new workers, and grow— especially at a time of rising interest rates.
The letter's diverse and extensive list of undersigned companies associations includes: AT&T, Crown Holdings, Inc., Dow, Eaton, Garmin International, Industrial Fasteners Institute, National Association of Broadcasters, National Association of Manufacturers, National Multifamily Housing Council, NCTA - The Internet & Television Association, Plastics Pipe Institute, Rockwell Automation, Sumitomo Corporation of Americas, Truck Renting and Leasing Association, Verizon and many others.Smart Rural Community (SRC). SRC providers are committed, community-based providers offering high-speed broadband to the farthest reaches of the country. The program also includes Smart Tribal Community for broadband providers serving Tribal lands, and Smart Connected Community providers, who serve more suburban communities. NTCA's Smart Rural Community Live conference is scheduled for June 26-28 in Fort Lauderdale, Florida. The unique event brings together voices from across the rural ecosystem, including communications, hospitals, libraries, schools, agriculture and elsewhere, to showcase the range of innovation and progress that can be achieved when community leaders work together to leverage broadband-enabled applications in creative ways.