Today, dozens of Ohio employers—from global clothing retailers to brewers, manufacturers, and health companies—banded together in a letter to warn Secretary Lew about the already devastating impact the Section 385 proposed debt-equity rules are having on investment and job creation. The letter highlights the complications to self-financing and access to capital, the hesitation to enter into long-term commitments caused by uncertainty created by these rules, and the increased compliance burdens and costs.

Sound familiar? It should, because as the U.S. Chamber noted in public comments to the IRS in early July, testified about later that month [subscription required], and has been saying on Capitol Hill, regarding the proposed regulations:

They make efficient global cash management nearly impossible, they hinder repatriation strategies, they result in lost interest deductions and increased dividend withholding, in instances they result in double taxation . . . they impact ordinary legal entity restructurings as well as equity compensation practices, and they cause additional problems such as increased compliance and the creation of complex hybrid instruments.    

These Ohio job creators further questioned how such rules remotely serve the goals of the Treasury Department to “[m]aintain a strong economy and create economic and job opportunities by promoting the conditions that enable economic growth and stability at home and abroad.” Finally, they emphasized a frequently heard cry of the business community, asking the Treasury Secretary to consider the damaging collateral consequences of these rules on employers striving simply to drive growth and create jobs.

We couldn’t agree more. As we’ve noted in the past, the business community’s concerns “must be addressed to prevent unnecessary disruption to normal business operations, as well as to ensure both that U.S. companies can compete globally and that foreign capital is welcomed within our borders.”

To be clear, there’s nothing about these regulations that target Ohio businesses. Businesses in all 50 states could have written letters. It just happens Ohio was first. The bottom line is that these regulations as currently proposed will have deleterious effects rippling across the U.S. economy.

Summer is over and Fall is here. But without Treasury action to relieve sweeping and damaging impacts of these rules, and similar relief from the Administration’s “audacious” regulatory program, an early Winter for the U.S. economy will arrive much sooner than expected. 

Here are the companies that signed the letter:

Abercrombie & Fitch Co.
New Albany

Aggregate Industries Management, Inc.

Akzo Nobel Coatings, Inc.
Columbus

American Petroleum Institute-Ohio

Anheuser-Busch
Columbus                                                             

ARC Abrasives, Inc.
Troy

BBA Aviation                                                               

Big Lots, Inc.
Columbus

BP America
Toledo                                                                  

Cardinal Health, Inc.
Columbus

Caterpillar Inc.
Clayton                                                                

ContiTech - a Continental company 
Fairlawn

Cooper Tire & Rubber Company
Findlay                                                                 

DDR Corp.
Beachwood

Forest City Realty Trust, Inc.
Cleveland                                                             

HMB, Inc.
Westerville

Huhtamaki
Batavia

Hyster-Yale Materials Handling, Inc.
Mayfield Heights                                                 

InterContinental Hotels Group PLC
Cleveland                                                                   

Invacare Corporation
Elyria

L Brands, Inc.
Columbus

Lafarge North America, Inc., Holcim (US), Inc.

Manufacturing Policy Alliance (OH)

McGregor Metalworking
Springfield

MillerCoors
Trenton                                                                 

Navistar International Corporation
Springfield

Nestlé

O-I, Inc.
Perrysburg

Ohio Chamber of Commerce

Ohio Manufacturers' Association

Owens-Corning
Toledo                                                                  

Patheon Pharmaceuticals, Inc.
Cincinnati

Philips North America
Highland Heights                                                 

Phillips Edison & Company, Ltd.
Cincinnati

Randstad

Sheely’s Furniture & Appliance Co. Inc.
North Lima                                                          

Siemens

Solvay

STERIS Corporation
Mentor                                                                 

Tate & Lyle
Dayton

TE Connectivity
Mansfield                                                             

The Kraft Heinz Company
Massillon

The Procter & Gamble Company
Cincinnati                                                             

The Timken Company
North Canton

Transamerica                                                     

United Technologies Corporation

Whirlpool Corporation
Clyde