[Congressional Record Volume 140, Number 139 (Thursday, September 29, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 29, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
INTRODUCTION OF LEGISLATION TO PROVIDE INCENTIVES FOR EQUITY FINANCING 
                            OF CORPORATIONS

                                 ______


                           HON. MEL REYNOLDS

                              of illinois

                    in the house of representatives

                     Wednesday, September 28, 1994

  Mr. REYNOLDS. Mr. Speaker, today I rise to introduce the Debt/Equity 
Financing Act of 1994. I urge my colleagues to cosponsor this important 
legislation.
  The purpose of the legislation is to provide incentives for equity 
financing of most American corporations while discouraging the implied 
risks of heavily leveraged companies.
  This legislation seeks to amend the tax code by reducing the 
deduction on debt interest expense by 20 percent while increasing the 
deduction on dividends paid to 50 percent of the amount paid. As 
written, the legislation is designed to be revenue neutral. In the long 
run, it should actually be a revenue raiser as it rewards prudent, 
productive corporate management.
  Mr. Speaker, at present, interest expense is fully deductible under 
the tax code, while dividends are not. As a result, the tax code 
implicitly favors debt financing.
  As we have all seen, the accumulation of significant debt by 
corporations has put the long-term economic health of such corporations 
in jeopardy. Some survive such fiscal high wire acts, while many others 
have not. Those that have fallen under the weight of their leveraged 
debt have cost thousands of dedicated American workers their jobs, and 
impacted communities. This legislation seeks to encourage debate in the 
Congress and in the country regarding the financing of American 
business.
  My colleague from Illinois, Senator Paul Simon has introduced this 
legislation in the Senate. I urge my colleagues to examine the 
legislation, and lend their support.
  I thank the Chair.

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