In prior articles, we have discussed the potential impact on GNC (NYSE: GNC) of proposed modifications to the corporation tax structure in the United States, especially with respect to proposals limiting the deductibility of corporate interest expense.
The original proposal from the House incorporated a deduction limitation, generally speaking, equal to 30% of a company’s adjusted taxable income, defined in the bill as earnings before interest, taxes, depreciation, and amortization, or EBITDA. The Senate proposal was rather more stringent, incorporating the same terminology but including depreciation and amortization in the definition of adjusted taxable income, such that the deduction would have been limited to 30% of EBIT, a much lower threshold.
