ATR President Grover Norquist today submitted a comment in opposition of Treasury’s proposed section 385 debt equity regulations. While these regulations were proposed as a way to halt business inversions, this is clearly not the case as they affect businesses regardless of whether they are inverting.

Instead, these regulations will only make it harder for American businesses to compete. They are unnecessary, will make it harder for our businesses to compete with foreign competitors, will reduce investment in the U.S., and will open the door for the IRS to further abuse its powers.

Debt and equity have been treated differently under the tax code for decades and businesses have structured themselves based on these rules. Altering these rules without adequate expert input as this administration proposes will immediately impact a wide range of common, internal business transactions such as the ability to redistribute cash among subsidiaries to make new investments.

In turn, this will result in extensive compliance and regulatory burdens affecting businesses across all industries. These regulations may result in less money invested in the U.S. economy, slow our already stagnant economic growth, and further encumber job growth. Additionally, the information disclosure requirements created to enforce this rule empower the already dysfunctional IRS to collect an excessive level of new information.

As written, section 385 regulations are an indiscriminate weapon that the federal government can use to restrict and undermine the legitimate business transactions of American companies operating at home and abroad, and foreign companies operating in the U.S.