A new report estimates that new limitations could lead to a loss of 867,000 jobs, $58 billion in employee compensation, and a $108 billion reduction in GDP

EY has released a new study for the National Association of Manufacturers (NAM) in which it expresses worry that the EBIT-based 163(j) limitation, which places higher limits on the deductibility of interest expenses, would have catastrophic implications on the economy of the United States. The study was prepared by EY. 

The findings of the study reveal that these decreases are nearly twice as great as was projected in the past. This is due to the detrimental impact that it had on the core activities of businesses that had low interest costs, the suppliers of those businesses, and the concomitant expenditures made by their customers. Before any market corrections take place, the analysis forecasts a significant increase in the number of jobs lost (from 467,000 to 867,000), a rise in employee compensation (from $23 billion to $58 billion), and a decline in GDP (from $44 billion to $108 billion).

"A stricter interest expense limitation restricts manufacturers' ability to invest in new equipment and create jobs," stated Chris Netram, Managing Vice President of Policy at the National Association of Manufacturers (NAM), in an accompanying news release. This was said by Netram. If this counterproductive action is not rolled back, the United States would suffer a loss of nearly 900,000 employment, as well as economic expansion and billions of dollars in employee compensation. 

According to the findings of the study, the costs connected with the change in policy will be borne by the manufacturing industry as well as other firms. Netram exerted pressure on Congress to move quickly and take action before the end of the year. According to the news release issued by the NAM, he asked lawmakers to take action before the end of the year to reinstate a pro-growth interest deductibility standard and permit manufacturers to continue investing in the future.